Posted by Bill Taylor on November 19, 2007 3:06 PM
Harvard Business

Last week, I spent an afternoon with senior executives and front-line employees from a remarkable small company—one that offers big lessons for companies of all sizes. Reflexite, based in Avon, Connecticut, makes the reflective safety material that gets attached to tractor trailers and police cruisers, construction cones and roadwork signs, firefighters’ coats and cycling vests. It also makes thin films that are a key part of the screens for mobile phones and laptops.
Business has been good. The company has annual sales of $100 million, up substantially over the last few years, with major facilities in Connecticut and Rochester, New York, as well as 14 locations outside the United States. How has Reflexite held its own against giant rivals such as 3M, with deep pockets and a vast global reach? By encouraging employees at all levels to be personally invested in the success of the company—literally.
Reflexite, it turns out, is owned in large part by the people who work there—500 employees who attend Town Hall meetings to discuss strategic issues, get monthly updates on finances and operating results, and are steeped in the company’s strategy and practices. Over the years, based on the performance of their business unit or location, workers received shares in the Employee Stock Ownership Plan (ESOP) worth 6 to 18 percent of their salary— including 60 workers in a factory in the former East Germany, and, starting this year, 110 workers in China.
No one is going to confuse an engineer or project manager at Reflexite with a Microsoft millionaire (of which there were a staggering 10,000 by the year 2000) or the newly minted stock-option millionaires at Google (where an estimated 1,000 employees have a net work in excess of $5 million). Still, the shares have performed well. Reflexite’s ESOP took shape in 1985, with an initial contribution of $150,000. By 1995, the ESOP shares were worth $20 million. Today, the ESOP has a value of $40 million.
The Wall Street Journal recently named Reflexite one of America’s Top Small Workplaces for 2007—and after visiting the company, I understand why. For this organization, “a sense of ownership” isn’t just a state of mind—it is a fact of life. Nor are shares simply a form of compensation—they are vehicle for participation in vital company affairs. (Indeed, after employee-owners urged the company to revise the formula for issuing shares, the board approved the change.)
Cecil Ursprung, the company’s long-time CEO, who now serves as a director, thinks deeply about the impact of a company whose people think like owners. “People are at their best when they’re in a constant state of mild dissatisfaction, when they’re always looking to make things a little better,” Mr. Ursprung said. “That’s what ownership does. It’s remarkable what gets unleashed when people share in the wealth they help create.”
What are you doing to create a sense of ownership—literally, figuratively, or both—inside your organization?

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