Work alienation. Is employee ownership the solution?

Alienation: What is it?

Alienation may not be a word that’s used very often in relation to the workplace but perhaps it deserves more attention than it receives. In the context of work, it refers to employees who feel disconnected from their job, from their colleagues, and even from themselves. It will be no surprise that alienation has several negative consequences. It can lead to job dissatisfaction, a lack of commitment to the firm, a lack of ‘organizational citizenship’ behaviours, and potentially a reduction in wellbeing.

How does it come about?

There are four potential causes of alienation: feeling that you have limited control over your job and how you perform it (power); feeling that your job has limited value and/or you can’t see where it fits in the grand scheme of things (meaning); feeling emotionally or physically isolated at work (belonging); and feeling that you are not working to your full potential and/or your job does not fit with who you are (fulfilment).

What has all this got to do with employee ownership?

Given that employees in employed-owned (EO) firms have a stake in the business – both financial and decision making – we suspected they might experience less alienation.

Our research project

We wanted to find out what aspects of employee ownership impact alienation and to compare EO firms with conventional firms. We conducted two stages of research. The first was qualitative and consisted of one-to-one interviews, lasting about 45 minutes each, with 33 employees in EO firms. The second was quantitative consisting of a questionnaire which was circulated to EO and non-EO firms.

Research findings: Qualitative

We found a variety of characteristics and practices in EO firms that reduce alienation. Examples of these factors, which we’ve categorised, include:

Tensions

However, it wasn’t a perfect scorecard. We found several tensions which, if not managed, could alienate some employees and reduce the benefits of employee ownership. These were by no means universal but were evident in several firms:

Tension 1: Decisive leadership versus collective decision making

Some employees expected to have greater influence. When this didn’t materialize, they considered employee ownership to be a pseudo democracy. In contrast, some leaders said that collective decision making was too slow and that employees had unrealistic expectations.

Tension 2: Reward equality versus reward equity

Some felt aggrieved that everyone received the same bonus regardless of their level of involvement in employee ownership activities. This led them to question whether extra effort was worth it.

Tension 3: Contractual obligations versus non-contractual expectations

Some employees felt isolated because they didn’t ‘buy into’ the employee ownership ethos. They wanted to come to work to do their job without getting involved in employee ownership activities. Some leaders said there was a place for everyone, although in a minority of cases, there was an acceptance that those who didn’t feel comfortable would/should leave.

Tension 4: Information transparency versus information control

While a key aspect of employee ownership is information sharing, some employees felt overloaded and, particularly in relation to financial information, couldn’t always work out what was good and what was bad news. Some leaders said they were still trying to decide how much information to share.

Tension 5: Organizational citizenship versus work-life balance

Many took employee ownership duties seriously and got involved in various voice groups. However, this additional commitment could impact life at home.

Research findings: Quantitative

We asked a number of different questions to arrive at an overall score for alienation. We found that the average score for alienation in EO firms is about half that of conventional firms.

We found that levels of alienation are related to seniority. Senior staff are less likely to feel alienated than middle-ranking or junior staff. When we compared EO firms with conventional firms, although the mean score for alienation among senior staff was identical across both types of business, the score for middle ranking and junior staff was very much lower in EO firms compared with conventional firms. In other words, junior and middle ranking staff are much less likely to feel alienated in EO firms compared with conventional firms.  

When we looked at what factors influence alienation, there were some significant differences. In EO firms, meaning, belonging, and fulfilment are equally important in reducing alienation. Power has much less relevance. In conventional firms, the biggest driver of alienation is a lack of fulfilment.

There were differences too depending on level of seniority. For junior employees, power is not significant. What matters most is meaning, followed in equal measure by fulfilment and belonging. For middle ranking employees, power jumps up in importance. For senior staff, fulfilment has the strongest effect on levels of alienation.

We found no differences in alienation scores related to size of firm whether in EO firms or non-EO firms.

Key takeaways

1.Employees in EO firms are much less likely to feel alienated. However, conventional firms can implement many EO-type practices without transitioning to employee ownership.

2. Job meaningfulness, social belonging, and self-fulfilment matter more than perceptions of power. However, there are variations depending on level of seniority. Leaders need to be aware of, and manage, these differences.

3. To maximise the benefits of employee ownership, leaders need to be mindful of potential tensions and manage them to reduce their negative impact.

Research authors:

Professor Mario Vafeas and Dr Ed Little

Bristol Business School, University of the West of England.

The full article for the qualitative stage of this project is available in The International Journal of Human Resource Management: https://doi.org/10.1080/09585192.2024.2439258