EV Soure Employee Bill-of-Rights
Employees are the greatest asset a business can have. Indeed, without them, there is no business. To show our commitment to our employees, we've created an Employee Bill-of-Rights. This describes what employees are entitled to, and how this can be mutually beneficial to the employee and company by stimulating creativity, satisfaction, and innovation.
The Employee Bill-of-Rights (EBR) begins with a description of property rights. The ability to own property is fundamental to a thriving free-market economy. This concept of property rights will be applied indirectly in the EBR by empowering employees through ownership of the work they perform, and directly by providing opportunities to become joint owners of the business.
- Protecting individuals' private property rights stimulates growth and investment.
- Property rights must be clear and well defined. This guarantees that owners will benefit from the value they create and will be held accountable for the full cost of the value they destroy. This system prevents the "tragedy of the commons" from transpiring.
- Unclear ownership that results in the overuse of a resource is known as the "tragedy of the commons". In this system no one benefits from preserving a resource.
- People take better care of things that they own! The reason behind this is because the owners of a resource not only benefit from its use, but bear the costs as well.
- In a market economy, consumers direct the owner's use of property by rewarding him if he/she serves them well or abandoning him/her if he/she doesn't.
- Property rights are earned by using them to satisfy consumers.
- Increased specialization in property rights creates additional value to the firm.
- Decision rights are property rights within the organization.
- Decision rights are created by ensuring employees have well defined roles, responsibilities, expectations and authorities.
- Clear decision rights enable employees to consume, conserve, and allocate the company's resources as they attempt to create value.
- Decision rights enable employees to know what they are responsible for and to be held accountable, just like owners.
- Consistently making sound, value adding decisions increases ones decision rights.
- Decision rights reflect comparative advantages of individual employees. This means that the employee can perform an activity more efficiently and at a lower opportunity cost than other employees.
- Consistently making good decisions will result in expanding the decision rights of that employee.
- Best for the employee with the comparative advantage to make the decision.
- All employees have a potential to make a unique contribution based on their values, talents, knowledge, effort, and experience compared to others.
- Specialization and exchange satisfy human needs more adequately than self-sufficient individuals working in isolation.
- Decision rights should change over time, as our comparative advantages change as we make good or bad decisions. This guarantees that those with the best combination of values, knowledge, motivation, demonstrated capability and opportunity cost are making the decisions.
Roles, Responsibilities, and Expectations:
- Ensures that the employee will bear the consequences (good or bad) of a decision. Both the person making the decision and the person delegating are held accountable.
- Fosters a culture of ownership in order to avoid inaction, abdication or finger-pointing.
- Each employee held responsible to ensure that his/her RR&Es are current, accurate, and effective.
- RR&Es should be focused on maximizing employee's contributions to advancing the vision of the business.
- Supervisors must give frequent feedback, and performance reviews to help employee see areas of improvement and help employees understand their performance relative to expectations.
- RR&Es should focus on value creation and be tailored to their comparative advantage.
- The level of accountability should be articulated in the expectations.
- Expectations need to be clear, specific, and measurable. Expectations need to be open-ended and challenging enough to expand the employee's vision of what can be contributed to an activity, this encourages experimentation and innovation.
- Open-ended expectations lead to ever-increasing value creation.
- Decision rights give freedom to employees to act independently in carrying out their responsibilities of a given role.
- Those without the authority to make certain decisions can still create value.
- Successful entrepreneurs aren't deterred by their lack of authority to control resources.
- Employees are encouraged to discover opportunities for innovation or improvement and to seek out proper authorities to act on those ideas.
- Employees earn approval for their ideas by implementing the Decision Making Framework. If the proposal is approved, employees earn increased decision rights.
- Value creation throughout a company requires the need of employees to raise awareness, propose solutions, and find ways to address the problem or capture the opportunity.
- Ideas and creative energy of all employees should be leveraged to create value.
- Decisions should be made by those with the best knowledge, taking comparative advantage into account.
- Demonstrated success in decision-making reveals an individual's decision-making ability for only that type of decision.
- Defining and updating every employee's RR&Es and corresponding authorities creates enormous benefits for both the business and the employee. This process establishes clear priorities, individual ownership, accountability for results, and scorecards for compensation.
- This process connects individual employees to the vision and strategies of the business allowing them to achieve business goals. It enables the employee to make value-adding decisions.
- The combination of well-designed decision rights process, good values, knowledge sharing, measures and incentives brings about a spontaneous order that maximizes value creation and growth.