Highly engaged employees with an entrepreneurial growth mindset are the lifeblood of an energized, healthy workplace.
Countless industry studies and surveys demonstrate that workers who think like owners drive productivity, efficiency, service excellence, and profitability.
And it turns out, employees who think like owners aren’t simply found — they’re grown and nurtured with consistency, coaching and mentoring, communication, and time.
When employees have a sense of earning their ownership stake, rather than having it foisted upon them (like so many trendy management philosophies), they get a real chance to engage with the idea and make it their own.
But there are plenty of misconceptions about establishing and cultivating a sense of ownership in the workplace that can backfire for business leaders. But first, it’s important to get an idea of the benefits ownership culture can offer to a business.
ALSO READ: 7 of the Best Ways to Build & Strengthen a Unique Ownership Culture
Ownership Culture Promotes Growth & Profitability
Plenty of companies like to tout perks in their environment like free snacks or catered lunches, and while those are nice extras, they don’t really sum up an organizational culture. What does? Culture is an invisible force that drives ways of thinking, attitudes, and actions of everyone throughout a company. It’s demonstrated in the ways managers treat employees and employees treat each other. It’s reflected in professional growth opportunities, policies for pay and promotion, and workers’ willingness to be accountable for performance.
Numerous studies have shown that when employee-owned companies like ESOPs incorporate participative management styles that encourage employee engagement, they experience faster growth, higher profit margins, longer employee tenure, and even higher wages than other types of companies.
But an ownership culture isn’t something simply declared by management or established through a transaction like an ESOP sale. Culture is a product of the people who contribute to it, so it’s a living, breathing, learning, and evolving aspect of your business. If it’s not, you may have fallen into one of these hazards, and it might be time to make some changes.
- Reliance on One-Way Communication
- Failure to Create Ownership Opportunities
- Reluctance to Embrace Open-Book Management
- Neglecting to Include a Diversity of Viewpoints
- Regarding Ownership as a Handout
- Lack of Clarity in Your Organization’s Mission
- Reverting to Micromanagement When the Going Gets Rough
1. Reliance on One-Way Communication
People know when they’re not being heard, and one of the fastest ways to shut down engagement is to stop listening. On the other hand, when employees believe their concerns, challenges, and proposed solutions are truly heard, they perceive their value within the organization. That’s both energizing and empowering.
Leaders have many tools at their disposal to connect and listen, such as:
- One-on-one check-ins
- Quarterly surveys
- Suggestion boxes
- Open office hours
- Monthly meetings
- Dedicated channels on Slack, Teams, or another online platform
2. Failure to Create Ownership Opportunities
An ownership culture should be evident from job candidates’ first interactions with your organization. They should perceive it in the way their questions are answered with confidence and authority. Once hired, onboarding and training should provide the knowledge they need to succeed.
Professional development programs, organizational initiatives, and culture and communication committee participation all offer ways for workers to contribute to shaping your shared work environment. Ownership thinking can be learned, so create meaningful ways for employees to grow into it.
3. Reluctance to Embrace Open-Book Management
No one is suggesting you unlock the HR files or share all the financial details, but it can pay to help your whole team recognize how their contributions can affect the shared bottom line. By embracing open-book management and regularly sharing selected key performance indicators, you’re not just keeping workers updated — you’re actually demonstrating ownership at work.
Ultimately, ownership culture relies on mutual trust. As a leader, you can demonstrate that you trust your employees to think deeply about company performance, to ask about concepts or items they don’t understand, and treat the information as confidential. That engenders pride and a desire to perform to expectations.
4. Neglecting to Include a Diversity of Viewpoints
A unified sense of shared ownership is not the same thing as corporate groupthink. In fact, ownership culture adds an element of democracy to the workplace, making room for new ideas and innovative thinking. A broader, more inclusive mindset often comes as a natural result of active, empathetic listening.
It’s also important to note that many workers experience marginalization at work — due to differences in identity, disability, language, or other factors. At its best, ownership culture makes all employees feel seen and, in turn, want to contribute to the shared culture.
5. Regarding Ownership as a Handout
When ownership is simply given, rather than earned, the effect can be more paternalistic than empowering. In fact, one study found that paternalistically managed family-owned businesses experienced slowed growth over each generation of ownership.
But if ownership culture permeates even your hiring process, candidates will frame being hired as earning a place on your team. Equity compensation plans like employee stock purchase programs and employee ownership through an ESOP lend a very concrete, grounded sense of ownership stakes to the job by tying an employee’s awareness of the company’s share value to their work performance.
6. Lack of Clarity in Your Organization’s Mission
Shared ownership doesn’t mean that every employee has input on every decision; that would be chaos. In fact, HR should be accountable for communicating the mission to every candidate throughout the hiring and onboarding process. New hires come aboard understanding the charge from day one.
When you’ve established trust and clear communication with employees, and they understand the mission and agree on its value, they’re more likely to perform better. Knowing the why behind their day-to-day tasks adds purpose, and empowers them to use their critical thinking and authority in ambiguous or challenging situations.
7. Reverting to Micromanagement When the Going Gets Rough
In an ownership culture, everyone has a chance to experience professional growth and continuous learning — including those at the highest levels of leadership. That includes learning how to steer the business without reverting to bad habits when challenges arise. Think about how often market conditions change and your business is affected by forces entirely outside your control.
Now think about facing a challenge like that after taking away every bit of autonomy, authority, accountability and trust you have when employees are encouraged to think like owners. Maintaining that sense of shared accountability incentivizes and inspires problem-solving among more members of your team. In fact, a recent study showed that ESOP-owned companies were measurably more resilient in the face of pandemic challenges — just the kind of hard-to-predict situation you want your best talent working to solve.
Make Ownership Culture Part of the Company Mission
Culture is a set of core values translated into behaviors. It sets an expectation for how things are done. When an organization has a strong culture, employees do three things:
- They know how leadership wants them to respond to any situation
- They believe the expectations are correct
- They know they will be rewarded for demonstrating the organization’s values
Developing a strong ownership culture begins with identifying the organization's values and defining the behaviors that align with these values. Leaders at ESOP companies often learn fast that paradoxically, it takes more than employee ownership to cultivate an ownership culture. But with a few significant action items, you can start incorporating a stronger sense of ownership thinking right away.
Within corporate governance, shareholders can ensure that remaining employee-owned is a legal purpose of the company. Both the ESOP and its ownership culture should be articulated as long-term strategic company objectives.
Shareholders should select board members with ESOP experience, and all board members should support both the ESOP and employee ownership, with training provided as needed. Shareholders should consider effectiveness in their support for the ESOP and ownership culture when evaluating board members.
Ideally, the board would incorporate the ESOP into its long-term corporate strategy and include future repurchase obligation forecasts in its strategic planning process. Best practices for a sustainable ESOP include making impactful contributions to the ESOP and continuously evaluating the employee benefit level, distribution policy, and ESOP funding. The Board should also implement a policy for evaluating unsolicited offers, to ensure they’re undertaken with shareholders (i.e. the employees) in mind.
A strong ownership culture’s impact extends all the way to the trustee’s fiduciary risk. By electing ESOP-supportive board members, the trustee demonstrates acting in the shareholders’ best interest. And in those ESOPs that paid a control premium for voting rights, the trustee is accountable for ensuring the ESOP has and maintains both voting control and control in fact.
Learn more and start strengthening your ESOP culture of ownership. Download the free guide to ownership culture. Just click the link below for yours.
