What do the words “investment,” “incentive,” “teamwork,” “equality,” and “employee involvement” have in common?
They’re all phrases people use to describe their company’s ESOP. Over the last nine
years, we have surveyed over 1,500 employee-owners and asked what employee ownership
means to them. The range of sentiment is incredible. The actual descriptions above,
for example, all come from a single company with fewer than 50 employees.
These words may not match your definition of ownership--you may even say that
some of them are just plain wrong. But for better or for worse, these are the
psychological associations people have with the concept of ownership, and
leaders of employee-ownership companies have to deal with this diversity of
opinion if they want ownership to get everyone pulling together.
Most business leaders know about market share, machine specifications, and
finance--not psychology. Building a consensus about the meaning of ownership
is not part of the business school curriculum, and there aren’t many tools
out there to help.
Definitions and Data
Leaders need good data to tackle the task of culture building, and that means
a systematic way to find out what employees mean by the word “ownership.”
With the help of our clients, we developed an attitude survey devoted to that
very task: the Ownership Culture Survey. In the survey, people report what about ownership is important to them.
They rate the importance of the five common meanings of ownership:
- Getting the maximum financial payoff from ownership
- Having a say over decisions that affect my daily work
- Employees having real influence in how the company is run overall
- A sense of community, that “we’re all in this together”
- Being treated fairly
Before you read on, stop for a minute and decide which of those five meanings
seems most important to you. (You can pick more than one if you want to.)
Chances are you picked fairness, or at least picked fairness as tied
for first. About 80% of our survey respondents do. If fairness is most
important, what is the least important? By far, employee owners say that
influence over company-wide decisions matters less than the other possible
meanings. There’s not much difference among the other items: scores on the
three other meanings (participation in local decisions, financial payoff
and a sense of community) cluster in the middle: never as high as fairness,
and never as low as influence.
In fact, no matter how we analyze the data, people overwhelmingly put
fairness first and influence last. That’s true for managers and non-managers,
new employees and old employees, men and women, high paid and lower paid. It
even holds for people we identified as cynics.
Of course, fairness is not the only issue employees care about. People think
that all five of these issues are important. Even the lowest scoring one,
influence over company-wide issues, has an average score of 7.5 on a scale
from one to ten. People do want to have a voice in how the company works,
but they seem to care more about having a say in the decisions that affect
their daily work.
So what does all this mean?
First, companies should consider a systematic assessment of their own work
forces to determine the level of consensus--or dissent--about the meaning of
ownership. You’ll also be able to see how that changes over time.
Even if your company doesn’t survey employees, a few general patterns emerge
from our data that may be useful. For example, financial payout is not the
primary thing most people say they’re looking for with an ESOP. If you treat
your ESOP as a strictly financial incentive for people, you’re missing the
greatest potential of ownership. Ownership is a great financial incentive,
but its cultural power can be even greater.
One good way to harness that power is to emphasize themes of fairness and
respect for individuals. These themes should not be just in communications
and training programs, but in the way managers and employees interact. When
people feel that the company treats them with fairness and respect, when it
shows that it values them and their contribution, it gives employee-owners
a reason to care about the company. Business owners invest
something of themselves in the company in addition to the money. The
survey results suggest that employee owners can feel the same way.
Looking more deeply at the data, one surprising pattern emerges over
and over: middle managers and supervisors tend to rate all five meanings
of ownership as less important than other employees do, including senior
managers. For most people, middle managers are the “face” of the company,
and an ownership culture will be almost impossible to put together without
their active support. If your drive to build a company of owners is
faltering, your middle level may need more support before they change
their perceptions of ownership.
The way employees perceive an ESOP often has more to do with the way
our society defines ownership than with the plan documents. With
appropriate tools and the right approach, company leaders can turn
those perceptions into a competitive advantage for the company.
Loren Rodgers works for Ownership Associates, a firm providing
ownership culture-based services for employee-ownership companies,
and for the New England Chapter of The ESOP Association. More detail
about this topic is available in Ownership and Motivation,
the fourth issue of the Ownership Culture Report, available at