August 14, 2020

Ownership Culture Insights: Why Employee Involvement Matters

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Any company, whether it is employee-owned or not, would love to have a culture in which its employees think and act like owners in the workplace. Fortunately for ESOP companies, their employees really do have an ownership stake in the business they work for, but as we have said time and time again at NCEO meetings and events, the ESOP alone cannot create this type of attitude or engagement.

In 2015, I was introduced to David Erdal’s book Beyond the Corporation: Humanity Working, which explores shared ownership of businesses worldwide. In it, I came across a passage that stimulated my thinking about how employees experience and think about ownership in their workplaces. Erdal suggests that “one of the strongest predictors of whether a person feels like an owner is how recently he or she has been involved in making an improvement.  The more recent the involvement, the more positive the attitude.” Erdal goes on to explain that this relationship between involvement and feeling more like an owner of the company is certainly a positive correlation, but not exactly a proven cause-effect relationship. It will almost always run both ways; as Erdal explains, “the more you feel like an owner, the more you get involved in making improvements; and the more you make improvements, the more you feel that your ownership is real.”

In my experience surveying employee-owners with the NCEO’s Ownership Culture Survey, this seems to be true, and it is also true that when we ask employee-owners what would make them feel more like owners of their company, they consistently express an interest in more involvement in decisions that affect their day-to-day work and have a positive impact on the company’s performance or culture. Surveying several companies in the years that followed, we explored the relationship between the sense of ownership identity among employees based on how recently they had been involved in some kind of personal or group-level improvement effort at the company. What we found was consistent with Erdal’s understanding of this relationship. In fact, at every company or location we surveyed, a much higher proportion of employees that had been involved in such an effort within the prior six months identified as owners of the business compared to those that had not been involved.

We measure ownership identity on a one-to-ten scale, where the nines and tens feel strongly like owners and the responses at three or less do not feel like owners at all. In one company that took the ownership culture survey, 78% of employees that had been recently involved in making an improvement identified strongly as owners. Comparing this with employees that had never been involved in such an effort, I found that only 14% felt strongly like owners, and nearly 30% of this group did not feel like owners at all (they had scores of three or less), while the rest remained neutral. This story was true for every company we did this analysis for. Involved employees identified as owners at a much higher rate than those that had never been involved. What this illustrated for many of these businesses was the importance of creating more opportunities for involvement and structures that helped managers facilitate involvement more effectively in their workplace. While ESOPs are certainly meaningful tools for shared ownership, they act as a reward and benefit for the efforts of employee-owners and do not create engagement alone. Creating a true sense of ownership thinking and behavior requires a culture that goes the extra mile to meaningfully involve employees in all aspects of the businesses they own and work for.