Chief Strategy Officer, SEI Boston.
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While there are many ways to implement employee ownership, it is widely accepted that the primary purpose is to create a highly engaged culture where employees, by thinking and acting like owners, are more invested in the company and its prosperity. But are today’s employee ownership models actually achieving this? For most enterprises and their employees, the answer is a resounding “No.”
People tend to think of employee ownership as the economic ownership of equity in the organization—often in the form of stock and shares—but there’s far more to it than many realize. Economic ownership is far less impactful when those owners still demonstrate an employee mentality.
Employees can’t just be owners. They have to feel like owners, too. But how can leaders foster this mentality?
Economic Ownership Vs. Owner Mentality
Contrary to Frederick Winslow Taylor’s popular theory of money as a core motivator, employee ownership hasn’t proven to be the answer to motivation in the workplace many employers hoped it would be.
Although employee ownership has been linked to higher employee retention and productivity, these benefits are stifled by employer insistence on implementing employee ownership as a benefit—much like a bike-to-work scheme or flexible working—rather than a state of mind. In doing so, employers are missing out on the myriad of benefits that accompany an owner mentality.
Economic ownership typically involves employees owning shares, stocks or other enterprise assets. These gains are solely financial and function much like an end-of-year bonus. When unaccompanied by an owner mentality, economic ownership rarely amounts to more than additional compensation. It does not promise an altered workforce mentality, nor improved employee alignment with a company's values and mission.
But when an owner mentality is actively nurtured, employees are motivated to invest in more than their own financial compensation. They think and feel like an owner—which improves accountability and alignment with company goals and contributes to a wider company culture where employees feel they are impacting the long-term trajectory of the organization.
Employees who have an owner mentality are truly empowered.
Different Approaches To Employee Ownership
Many companies that implement an employee ownership program neglect or overlook owner mentality. Instead, they opt for employee ownership models that prioritize economic ownership. Companies of different sizes tend to approach this in different ways:
• Startups And Small Businesses: For small businesses and startups, being an employee owner typically means you’re someone who got in early. These employees often get paid less in exchange for ownership of a company that has the potential for success. These employees often don’t have a connection to the company’s product or mission—instead, they think like a “future owner” and treat the company as an investment that has yet to pay off.
• Middle-Market Companies: A majority of these (often private) companies offer ownership at the highest level—to senior staff and executives—but not to the individuals who really drive the company’s efficiency and profitability. Instead, they might throw benefits at employees in a poor attempt to raise retention rates, promote satisfaction and fix productivity issues. But without the opportunity to become true employee owners, employees are unlikely to feel invested in the organization.
• Large Organizations: Many large organizations will use employee ownership as a bonus (e.g., receiving 80% of a bonus in stock ownership). This effectively handcuffs employees to the business—potentially improving retention rates, but maybe not improving satisfaction or productivity.
While these employee ownership models may assist with retention in some cases, or serve as another standard job benefit, they are unlikely to impact employee accountability, motivation and dedication to your enterprise.
How To Nurture An Owner Mentality
It's time for employers to radically alter their understanding of employee ownership and move toward treating employee ownership not as a benefit, but as a belief. Broad-based employee ownership, ideally from Day 1, is a surefire foundation for a successful organization.
Whether you’re just starting an employee-owned company or improving the ownership mentality of current employee owners, you must be willing to establish or reestablish operating norms to achieve the full benefits of employee ownership. Consider the following aspects when supporting a broad-based employee ownership mentality:
1. Hiring: Along with hiring employees for their talent, vision and values, hire employees who have an owner mentality. These new hires will bring that mentality into your organization and positively contribute to the entire team’s perspective.
2. Transparency: When practicing broad-based employee ownership, ensure all employees have access to important data like sales, recruiting and financial information. This will help them understand the trajectory of the organization, improve collaboration with colleagues and truly think like an owner.
3. Longevity: Company leadership is also responsible for protecting, strengthening and upholding the ownership mentality of their employees. By clearly outlining what traits accompany employee ownership, what it means for business operations and how it helps everyone achieve their goals, you can sustain a broad-based owner mentality even as the company grows.
Real Employee Ownership, Real Business Benefits
Fostering a true employee ownership mentality can boost productivity, keep your employees engaged and invested, and ultimately promote the success of your enterprise.
There’s no one-size-fits-all approach to employee ownership—but that’s a good thing. When you support an owner mentality within your organization, everyone can personalize it to what it means for them and what it means for the common goal.
A strong owner mentality can set your organization on a path to success, and an employee ownership program is a powerful component. But to maximize the impact for your team and business, be sure your program is focused on fostering true owners, not just employees with ownership.
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