How to Measure Employee Ownership

by Kevin McManus, Chief Excellence Officer and Systems Guy, Great Systems

I was once asked in an e-mail how I would measure employee ownership in a company. Before we get into the suggestions that I offered, we might want to first consider the question “Why is it important to have high levels of employee ownership?” While this might sound like a silly question to some, there are people out there who really don’t care if the levels of employee ownership in their company are high or not. How do I know this?

The Need for High Levels of Employee Ownership

To begin with, I believe that we only measure what we consider to be important. If your company does not measure ownership at all, let alone have strategies in their strategic plans for improving these measures over time, I would question the degree to which employee ownership is important to you. Over the past twenty-plus years, I have served as an Examiner for the national Malcolm Baldrige Quality Award and also assisted multiple state award programs. I have read many applications over that time, and yes, some of those applications did not include measures of employee ownership in their results.

Secondly, I have seen how people are treated in some companies I have crossed paths with over time. If I attempt to put myself in their shoes, I would have a hard time taking much ownership in those organizations. If we allow systems to exist that hinder, or actually decrease, ownership levels as each day goes by, we probably don’t care that much about ownership levels.

Still, the question begs to be answered – why do we need high levels of employee ownership? Well, first of all, if you are trying to make a high quality product or provide a high quality service, and the quality of those product or service attributes cannot be totally controlled by machines, then ownership levels directly affect the quality of your product or service.

If you expect people to move at a fast pace, control quality and costs, and keep the customers coming back, then the level of ownership people have affects their work output. If you count on your people to let you know when problems exist or improvements are needed, you better recognize that their desire to tell you what you need to know is directly proportional to the level of ownership in the company that they feel.

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How Can the Feelings of Employee Ownership be Measured?

Yes, we are talking about feelings. Ownership is a feeling – a state of mind or an attitude – and that makes it tougher to measure. I believe that all companies rely on ownership to some degree in order to make money and keep the customer happy, whether they recognize that fact or not. How our people feel does affect the quality of our products and services. Feelings of ownership also affect the pace of their work, the degree to which they work safely and follow the rules, and their willingness to let us know when improvements are needed. Do you measure ownership in your company? Do you think you might benefit from doing so?

Here are some possible approaches that I have used, and seen used, to measure employee ownership levels in high performance organizations and in companies that have such aspirations:

Internal Customer Survey ‘Ownership’ Statements

The most tangible measure of ownership that I have seen used involves including an ‘ownership’ statement on the internal customer survey and trending the top box response rate to that statement over time across all internal customer segments. Example statements include “I take ownership in the success of my company” or “I feel a strong sense of ownership in the products we make.” Unfortunately, not all companies consider their employees to be internal customers, and too many think internal surveys are either a waste of time or something that needs to be done only every other year or so.

Internal Customer Survey Response Rates

The survey response rate itself is also an indicator of ownership, especially if you give this type of survey more than once a year. Yes, it is true – there are companies that do measure internal customer (employee) attitudes MORE than once a year. In fact, as intranet and social media use grows in companies, it is becoming more cost effective to do this. The response rate to your survey – the number of completed surveys you get back versus the number distributed – is a direct reflection of your peoples’ belief that the survey will make a difference and their desire to make the company more effective.

The design of an internal survey, and the survey administration process itself, also affect response rates. If your goal is to increase the response rate over time, you should be improving your survey process each time it is used to help drive this number up. Ownership levels, however, do significantly affect this rate.

Morale Measures Reflect Ownership Levels

Ownership is also reflected in morale measures, such as your absenteeism rate, retention or turnover rate, internal complaint or grievance frequency, and percent attendance at company functions outside of work. Many companies track some of these measures, but few trend them over time. Even fewer actually consider them to be key performance indicators of ownership.

Do you trend these values over time and review them monthly at your performance review meetings? Are ownership measures part of your balanced scorecard? Do you have strategies in your annual or multi-year improvement plans that are intended to improve employee ownership rates in the future?

Team Involvement and Idea Submittal Rates

If you have cross functional improvement teams that are voluntary in nature, the percentage of employees involved on these teams is a good indicator of ownership as well. Similarly, if you provide a way for people to contribute to your key improvement project lists, the rate at which they provide such projects is a good ownership indicator.

The degree of team effectiveness they experience and your ability to actually use, or at least respond to, their suggestions also affects these types of measures. In general, they are good indicators of your peoples’ desire to make ‘their’ company better. To what degree do your people want to help improve the company? How do you know?

Other ‘Softer’ Measures of Employee Ownership

Other more intangible indicators of ownership include general facility cleanliness, how people treat each other each day, and how open people are to sharing performance feedback. While it is tough to come up with a number for these types of indicators, you can easily gauge where you are at relative to them by simply walking through the facility or sitting in a break room.

Another more intangible indicator of ownership involves the degree to which a given performance improvement initiative, such as 5S, lean six sigma, or process improvement teams, is supported and can be sustained over time, by both your front line people and your middle managers. That brings up another question. How much ownership do your supervisors and managers have in the success of the company? How does their personal ownership levels and feelings affect the ownership levels of their people?

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Employee Ownership Drives and Sustains High Performance

In all cases, measures that are trended over time, and segmented by all key employee groups, give you the best feedback of your success in building ownership. Do you think it is important to measure and improve employee ownership levels over time?

Would you like to improve the systems you use to both measure internal customer ownership levels and increase those levels over time? If so, send me an e-mail at kevin@greatsystems.com, and I will be happy to give you some additional thoughts on this topic.

Keep improving! –Kevin McManus, Chief Excellence Officer and Systems Guy, Great Systems

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