Give people stock and watch performance soar. That's the promise. It's only half true.
Employee ownership creates a fork in the road. One path — equity paired with genuine participation — radically outperforms. The other? Ownership installed without participation actually underperforms.
How do we know? A landmark study by Rosen and Quarrey divided ESOP companies into three tiers by their level of participative management. The top tier grew sales and employees 8% to 11% faster than expected. The middle broke even. And the bottom tier — employee-owned companies where workers had little voice — declined. Not stagnated. Declined.
(For context: Participative management is when employees have real input into decisions that affect their work — things like how tasks get done, how resources are allocated, or how problems get solved — rather than just being told what to do from above.)
The Government Accountability Office confirmed it: of every factor studied, only one showed a statistically significant link to performance. Not ownership size. Not company size. Employee participation in decisions. That finding has held up for four decades.
Bill Fotsch's research with Harvard Business School replicated it across eight waves of study.
And our own 2025 EO Engagement Benchmark shows the same pattern in fresh data. When we mapped engagement against share price growth, companies in decline clustered at the bottom of the engagement scale. Companies growing 6%+ skewed overwhelmingly toward the top.
Participation isn't a soft perk. It shows up in the share price.
We surveyed hundreds of employee-owned companies and the data shows exactly what drives ownership cultures that actually perform. The themes that resonate most with employee-owners aren't about stock certificates. They're about pride of ownership (79%), wealth building (77%), and better teamwork (66%). Employees value the experience of ownership — participation, information sharing, and a direct line between their work and financial outcomes.
The communication channels that work best tell the same story. In-person events, team meetings, and wealth calculators top the effectiveness rankings — all interactive, all participative.
But here's the gap that should concern every ESOP leader: only 33% of respondents formally measure engagement. If participation is the engine that makes ownership perform, two-thirds of companies aren't monitoring it at all.
As NCEO founder Corey Rosen put it after decades of research: the strongest predictor of performance wasn't ownership stake or company size. It was management's commitment to participation. Companies that built participation programs grew three to four times faster than those that didn't.
If your ownership culture hasn't shifted, the fix isn't more shares. It's more participation. That single act is the difference between an ESOP on paper and an ownership culture that performs.
And if you’re not sure where to start, give us a shout. We’re helping 700+ employee-owned companies do exactly this.
