Employee ownership is a powerful model that transforms workplaces, fostering greater engagement, productivity, and retention. But many employee-owned companies are leaving critical opportunities on the table. To help our Members unlock the competitive advantages of employee ownership, we recently launched a new Certified EO Member Benchmarks Report.
By gathering insights about employee ownership plan design and communication from across our 700+ Members, we’re answering some of the most common questions companies have about how to do employee ownership right. This blog highlights one surprising finding from our initial report: 74% of employee-owned companies don’t have a formal way of measuring employee engagement.
This insight underscores a significant opportunity to improve engagement. Let’s unpack what this finding means, why it matters, and how companies can begin addressing this critical issue.
Unlock the Competitive Advantages of Employee Ownership
At Certified EO, we’re 100% focused on creating value for our Members. Our growing network of over 700 employee-owned companies represents a large body of collective knowledge. In October we launched a new initiative to help our Members harness the experience of our network: the Certified EO Benchmarking Survey.
Designed to identify common challenges and best practices across our Member companies, this tool represents the first step in creating actionable resources for the community. We launched with a simple 25-question survey aimed at identifying hard data on the most common questions we’ve received from Members, for example “what is the typical 401k match offered by an ESOP” or “how many people are typically on an employee ownership committee.” As the report grows, we can also loop in insight gathered through our unique Certification process.
Since this was the first version of our benchmarking report, we weren’t sure what we would learn, but we couldn’t have been happier with the results. The answers provided by Members showed us insights that we never would have guess. The most striking finding was in response to the question, “Does your company currently have a formal way of measuring employee engagement?” To our surprise, 74% of our Members said no!
Why Measuring Engagement Matters for Employee Ownership
Employee engagement is central to the success of employee ownership. The core value of being an ESOP lies in fostering a sense of ownership among employees—both in their roles and in the broader success of the company. When employees are engaged, companies see higher productivity, lower turnover, and better financial performance.
However, without a way to measure engagement, many companies are flying blind. Consider this: if you don’t know how engaged your employees are, how can you improve? The opportunity cost of disengagement is significant. Studies have shown that disengaged employees cost companies up to 18% of salary costs in lost productivity annually. For ESOPs, the stakes are even higher. Without engaged employee-owners, the benefits of the ESOP structure are largely unrealized, despite the massive investment in funding employee shares.
The lack of measurement tools points to a larger knowledge gap in the ESOP community. Many companies may not know where to start or assume engagement will naturally follow from the ESOP structure. However, our findings suggest otherwise: without intentional effort and measurement, engagement may falter.
What Can Companies Do?
While the data highlights a challenge, it also points to an opportunity. Here are some practical steps companies can take to begin addressing this issue:
1. Start with Simple Surveys:
Begin by implementing a basic employee engagement survey. Quarterly pulse checks or annual surveys can provide valuable insights into employee sentiment and areas for improvement. Surveying was the #1 method mentioned by Members who do have a formal system for measuring engagement, with many mentioning Gallup and eNPS.
2. Focus on Communication:
Engagement begins with understanding. Companies should prioritize communication and education efforts that help employees fully grasp their roles as owners.
3. Leverage Community Knowledge:
Many companies in our network have already begun tackling these challenges. Our webinars, discussion groups, and benchmarking efforts allow our Members to learn from these success stories and adopt best practices.
It’s important to remember that measuring engagement doesn’t need to be complex or overwhelming. The key is to take the first step.
