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 itself. Why is it important to have high levels of employee ownership? To some, this might sound like a silly question. Conversely, there are people out there who really don’t care if the levels of employee ownership in their company are high or not. Why do I believe that high levels of employee ownership are important?

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The Need for High Levels of Employee Ownership

To begin with, I believe that we measure and focus what we consider to be important. Does your company measure ownership to some degree? Are strategies in place to improve key ownership metrics over time? If not, I would question the degree to which employee ownership is important. 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. Through this process, I now see employee ownership and engagement as synonymous. Both are also much more than mere satisfaction.

Secondly, I continue to observe how people are treated in those companies I cross paths with over time. With some I encounter, 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.

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The Link Between Employee Ownership and Great Service / Quality Outcomes

Still, the question begs for an answer. Why do we need high levels of employee ownership? First of all, is your goal to make a high quality product or provide a high quality service, but you cannot control the quality of those product or service attributes totally by machines? If so, 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 customer loyalty high, then work team ownership levels affect work output. Do you count on your people to let you know when problems exist or improvements are needed? If this is the case, please 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 We Measure the Feelings of Employee Ownership?

Yes, we are talking about feelings. Ownership is a feeling. It is a state of mind or an attitude. This 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 that they work safely and follow the rules, and their willingness to let us know when improvements are needed. How do you measure ownership in your company? Do you think you might benefit from improving your ownership measurement practices?

Here are some possible approaches that I have used, and seen used, to measure employee ownership levels:

#1: Internal Customer Survey ‘Ownership’ Statements

The most tangible measure of ownership that I have seen used involves the inclusion of an ‘ownership’ statement on the ‘annual’ internal customer survey. Top box response rate trends for that statement are analyzed 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. Too many think internal surveys are either a waste of time or something that a company does only every other year or so. Ownership levels typically don’t improve over time without systemic influences of some type. Example system influencers include compensation plan changes, recognition system changes, leadership development, and personal development opportunity enhancements.

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#2: Internal Customer Survey Response Rates

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

The design of an internal survey, and the survey administration process itself, also affect response rates. Improve your survey process each time you use it if you want to increase your response rate over time. Ownership levels, however, do significantly affect this rate. Low survey response rates reflect low ownership levels.

#3: Morale Measures Reflect Ownership Levels

Morale measures also reflect work team ownership levels. Such measures include 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 employee ownership measures part of your key performance indicators? Do you have strategies built into your annual or multi-year improvement plans to improve future employee ownership rates?

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#4: Work Team Involvement and Idea Submittal Rates

If you have cross-functional improvement teams that are voluntary in nature, the percentage of employees that participate 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 work 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?

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#5: 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. Sometimes, it is tough to come up with a number for these types of indicators. One way to easily gauge progress in these areas is to regularly walk through the facility or sit in the breakroom. High value also comes from simply listening to people.

Another intangible ownership indicator is the degree that people support a formal improvement initiative, such as 5S, lean six sigma, or process improvement teams. What percent of your workforce participates in such formal efforts? How much ownership do your supervisors and managers show through their personal process improvement efforts? How do their personal ownership levels and feelings affect the ownership levels of their people?

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Employee Ownership Drives and Sustains High Performance

Trend key measures over time for all employee group segments to gain the best feedback of your employee ownership building success. Example measures are provided in the infographic. How important is it to measure and improve employee ownership levels over time?

Would you like to improve the systems you use to measure internal customer ownership levels? Would you like to 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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