Motivating Employee-Owners in ESOP Firms: Human Resource Policies and Company Performance  - CLEO Skip to main content


Over one-fifth of U.S. private-sector employees – 24 million workers — own stock in their own companies. Eight million participate in Employee Stock Ownership Plans (ESOPs) (Blasi, Kruse, and Bernstein 2003: 249). The growth of ESOPs over the past 25 years is part of a general growth in compensation arrangements linking worker pay to company performance, including profit sharing, gain-sharing, and broad-based stock options in addition to the various methods of employee ownership (Kruse 1993; Freeman and Dube 2000; Sesil et al 2002, Blasi, Kruse, and Bernstein 2003). Existing research shows that employee ownership firms tend to match or exceed the performance of other similar firms on average (Kruse and Blasi 1997), but with considerable dispersion of outcomes. The bankruptcy of United Airlines highlights that employee ownership can fail to deliver on its promises in some circumstances (Mackin 2002) while the continued success of firms like SAIC shows that ownership can produce long term growth in highly competitive technological industries.