Principles of Ownership

The founding members of Water Works Engineers were determined to create a consulting engineering firm that was based on quality engineering, hard work, mutual respect, and shared ownership. This approach encompassed many aspects of engineering and business operations, and included new ideas in both technical project delivery and project management. One of the guiding principles of this approach was the recognition that the value of any consulting engineering firm resides almost entirely in the reputation and capabilities of the people who work there.

With that key principle in mind, the founding members began the process of developing an ownership sharing framework that would allow employees the opportunity to earn “sweat equity” in the company they were helping to build. The intent was not only to create a company that was successful under the leadership of the founding members, but to create a framework that would provide for its continued growth and success into the future. In short, Water Works Engineers was “designed to evolve”.

The founding members began the company as three equal partners. Soon thereafter, they began implementing the ownership sharing plan by inviting the first group of highly contributing employees to become company owners. The ownership value “given” to these new owners was based on the company’s performance in the previous year, coupled with each employee’s individual contributions to that performance. This ownership was not purchased by the employees but was offered as “sweat equity” in the firm, without price.

One of the challenges with most traditional ownership/employee structures is the disconnect between individual employee performance and reward. In many bonus systems, there is what can be called a broken “feed-back loop” (i.e., the reward does not often measure up to the true value of the contribution made by the employee to the company). This disconnect stands in contrast to the fact that gaining ownership in a company has a transformative effect on the people involved. It almost immediately rearranges certain priorities and fosters new attitudes, commitments and desires. By implementing the sweat equity concept, the “feed-back loop” is restored and the employee benefits directly by becoming the owner of that portion of the company’s growth and success for which they were responsible. This approach has a synergistic effect on the company as a whole, thereby benefiting everyone.

The merits of such a cooperative approach to building and sustaining a practice seem obvious. The sweat equity system allows for old and new members to work together to build the company as partners. It also provides for the natural transition of ownership from group to group. As one group of owners contributes more and more to the company’s success and growth, they are rewarded with increasing ownership in the company. As owners’ contributions diminish, so does their ownership. These transitions take place over years and strike a balance between recognizing the contribution of those who have made the firm what it is today and those who are building the firm into the future. Ownership transitions are built in to the company structure, avoiding the disruptive, sometimes hostile ownership transitions that can happen in many corporations.

In a company whose value is almost entirely the reputation and capabilities of its members, it only makes sense that old and new members work cooperatively through shared ownership, and that this cooperation benefits all of the members involved. In essence, “you own what you build”. This simple concept forms the core ownership principle of Water Works Engineers and will keep the firm competitive, dynamic and a place where highly motivated, quality individuals will thrive.