Instead, they found that for ESOPs to be successful, companies must share operational information with workers and give them a voice in decision-making. Employee orientations and regular departmental and work group meetings, together with an ESOP, can help employees feel more vested in the company's future and motivate them to be more productive.
A participatory culture generates another positive effect. Looking at data from other ESOP businesses and their owners, the economists found that workers who are highly involved in decision-making are four times more likely to talk directly to a colleague who is underperforming and twice as likely to report that person to a supervisor. "The bottom line is employee ownership can help a business," says Kruse. But a business needs to have the right culture to get the most out of an ESOP. By James Mehring