How to Have Successful Employee Stock Ownership Plans (ESOPS)?

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I believe that there is a general consensus that participative management is the future of management practice. Single authoritarian management is passé.

There are many reasons for this, the first being that participative management has the ability to handle change better than the authoritarian one. Companies deal with change more successfully when all of the impacted entities work in unison.

But, implementing participative management in companies where workers or their representatives do not reap the benefits of their participation does not work well.

When employees participate in decision-making but do not share the results of their participation, they might use the management power given by participation to protect their interests. They can use their seat at the decision making table to retard or stop change that  might endanger their interests. Thus, participative management is not enough. People should participate in managing change but also benefit from it. That is where ESOPS come to play,

Companies with employee stock ownership plans (ESOPs) are essentially employee-owned companies. The employees benefit when the company does well.  

Some ESOPs companies, however, still use autocratic management, not participative management. The employees share the results but do not participate in managing to produce them. The profit sharing is a windfall gain for them. Companies with ESOPs that are autocratically managed do not benefit from higher motivation of the employees / owners .

The working formula is to participate in management and in the results produced.

Written by
Dr. Ichak Adizes
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