Additional Tool: Owner Employee Rules of the Game

EOS Owner/Employee Rules of the Game

Introduction:

The "Owner/Employee Rules of the Game" is an EOS (Entrepreneurial Operating System) tool designed to help businesses with multiple owners, partners, or family members navigate the complexities of wearing two distinct hats: Owner ("on" the business) and Employee ("in" the business). The core problem it addresses is the confusion and conflict that arise when these roles are blurred, leading to issues being brought "in" the business that should be resolved "on" the business, or owner-related behavior negatively impacting the employee environment. The goal is to create a clear separation between these roles to improve efficiency, communication, and overall business health.

Key Themes and Concepts:

• Two Distinct Roles: The foundation of the tool is the recognition that owners/partners/family members often operate in two distinct roles: working on the business as owners and working in the business as employees (seat owners). The tool aims to create a clear "impermeable wall" between these roles.
• As the video excerpt states, "...in an organization where people are bouncing between on the business owners and in the business seat owners. You've got to draw a strong hard impermeable wall between those two distinct hats that they have to wear."
• Owner "On" the Business: This role focuses on strategic decisions, long-term vision, and resolving owner-related issues. Owners need a structured forum to address concerns and opportunities.
• Owner Meeting Pulse: Regular (monthly or quarterly) owner meetings (Formal board meetings, Same Page Meeting) are crucial for owners to connect, discuss issues, and make decisions without bringing these matters into the daily operations of the business.
• Straight-Line Communication: Clear, direct, and honest communication is essential among owners. No vagueness or passive-aggressiveness. As the video excerpt says: "Just tell your fellow leaders what's on your mind."
• 50/50 Dialogue: All owners need to feel heard and have an equal opportunity to contribute to discussions. It's a "robust discussion where everybody needs to feel heard."
• United Front "In" the Business: Once a decision is made in the owner meeting, all owners must present a united front to the rest of the organization, even if they initially disagreed. This principle is "disagreeing commit."
• Issue Resolution: All owner-level issues must be resolved before they are brought into the business or Level 10 meetings. "Don't bring issues into Level 10s that weren't solved" (in the owner's meeting). "All issues are fair game" in the owner meeting.
• Employee "In" the Business: This role focuses on fulfilling the responsibilities of their specific seat/role within the company, adhering to the same standards and rules as all other employees.
• United Front: Owners, when acting as employees, must present a united front to other employees, supporting the decisions of the leadership team. The video excerpt states "If the leadership team or other members of your team think that you're not on the same page, not getting along, not wanting the same thing for the future of the business, really bad stuff is going to happen."
• Integrator's Final Decision: The Integrator has the authority to make final decisions within the business. Any disagreements with the Integrator's decisions must be addressed in the owner meeting, not within the business operations.
• No Politics or End-Runs: Owners acting as employees must avoid using their ownership status to influence decisions or bypass established processes. "No politics, pulling or end runs with other people."
• Accountability: Owners in employee roles are fully accountable for their seat and must adhere to the same performance standards as any other employee. "Complete accountability for the role/play by the rules."
• Termination is Possible: A crucial point: even owners can be fired from their employee roles if they are not fulfilling their responsibilities or adhering to the company's core values and rules. "You CAN be fired."
• Greater Good: In all cases, the "greater good of the business must come first."

Implementation and Facilitation:

• Timing: The tool is typically introduced during the IDS (Identify, Discuss, Solve) portion of a Quarterly Pulsing Session when owner/employee issues are surfacing in the business.
• Preparation: Implementers should watch the Owner/Employee Rules of the Game video, review the Implementer Guide, and be prepared to draw the diagrams and facilitate the discussion.
• Key Steps:Draw the owner/employee diagram on the whiteboard.
• Explain the distinct roles.
• Review each bullet point on LTM (Leadership Team Manual) page 35 (the "As Owners On" and "As Employees In" lists).

Important Considerations:

• Owners still receive profits: As the excerpt from "toolbox_-_owner_employee_rules_qa-Original-mp4.mp4" states, "...the good news is they still get a share of their share of the profits and they're still the ultimate decision maker for their business."
• The Rules Apply If You Choose To Be an Employee: Owners don't have to be employees in the business, but if they choose to be, they must follow the rules of the game for both roles. "They don't have to choose to be an employee in the business, but if they do, they've got to play by both sets of rules."
• Awareness of Influence: Owners need to be particularly aware of how their status might impact others, even in casual conversations. Even innocuous conversations can carry "more weight than you intend."

Conclusion:

The "Owner/Employee Rules of the Game" provides a structured approach for businesses with owner-employees to clarify roles, improve communication, and resolve conflicts. By establishing a clear separation between the "on" and "in" roles, the tool helps to ensure that the business operates efficiently and effectively, with owners fulfilling their responsibilities both as strategic leaders and as accountable employees. The ultimate goal is to promote the "greater good of the business" by creating a more harmonious and productive work environment.

RYT Podcast is a passion product of Tyler Smith, an EOS Implementer (more at IssueSolving.com). All Podcasts are derivative works created by AI from publicly available sources. Copyright 2025 All Rights Reserved.