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Observations on Employee Ownership

Does Employee Ownership Motivate People?

Corey Rosen

November 30, 2011

(Corey Rosen)Does employee ownership motivate people? Not much.

That may come as something of a surprise or disappointment to people who know I have been working in this field for over 30 years and hope to keep doing it for many more. But employee ownership doesn't have a strong motivational impact on its own. In fact, in my view (and that of a lot of researchers), incentive pay in general is not all that motivating. In fact, I'll go one step further. I don't think it is possible to motivate anyone very effectively. It's awfully easy to demotivate them, however.

But I've not become a jaded cynic after all these years. Quite the contrary. At the NCEO, I work with an incredibly motivated, effective staff. I've talked with and (better) listened to people at hundreds of companies whose employees are just as motivated and effective, and who couldn't have gotten there without employee ownership. But the reason all these people are so motivated is the companies they work for (and the NCEO too) have a culture in which people are allowed to motivate themselves.

Think about what really is motivating at work. For most of us, it is the opportunity to be challenged in a way that well fits the skills we have, have the chance to have a say about what we do and how we do it, and have a sense of purposefulness about our work. We don't need someone giving us a pep talk. We just need the organizational structure that includes these key elements of a motivating job. Companies with ownership cultures—ones who share information widely, use collaborative decision making, and push down decisions to the lowest possible level—create the environment for all that to happen.

Ownership—real ownership—matters because without it people can feel manipulated. If people feel their efforts to create a more effective, profitable enterprise are mostly or entirely benefitting other people, they are likely to become demotivated. From the time we are little kids, "it's not fair" is one of the most compelling complaints we have in life. Sharing ownership is a lot more fair. So without it, it is a lot harder (albeit still possible) to maintain that motivation your structure has created.

There is a catch here, however. It's easy to imagine a company where employees have lots of freedom to "follow their bliss" as we used to say in the 1960s. But letting people just follow it anywhere can be highly unproductive. The trick for management is to create a system in which people have a lot of freedom within a set of flexible parameters focused on business success. Ideally, when people are hired, they understand the business model well enough to know what these are and buy into them, but also know that within them, there is a lot of room for challenge, input, and growth. That's not easy to do, but it's well worth the effort.

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