A March 2026 study from the Rutgers Institute for the Study of Employee Ownership and Profit Sharing found that Employee Stock Ownership Plans (ESOPs) are a contributing factor to increased productivity among manufacturers.
The study examines the relationship between ESOPs, management practices and labor productivity in U.S. manufacturing. Its findings suggest that ESOPs can not only be viewed only as succession-planning or employee-retention tools but also as a strategy to increase productivity.
The research uses the most comprehensive dataset assembled to date on employee ownership in U.S. manufacturing, making it especially relevant for manufacturers considering operating under an ESOP model. Whereas prior studies focused primarily on publicly traded companies, 99% of companies analyzed were privately held firms. The authors found that manufacturing accounts for more than 20% of all U.S. ESOPs, and more than 98% of manufacturing ESOP plans were in privately held companies.
Key Takeaways:
From Patrick O’Neill, Director of Research and Public Sector Strategy:
ESOP adoption was associated with higher productivity
From 2010 to 2015, adopting an ESOP was associated with a 5.6% to 6.7% increase in labor productivity, even after controlling workplace managerial and organizational practices, number of employees, capital and materials inputs into production, union status, and geography.
Ownership had the strongest effect when paired with group incentives
Manufacturers that adopted an ESOP while maintaining broad-based group performance pay saw estimated labor productivity growth of 12.98%, or roughly 2.6% per year.
The value of ownership appears to increase when employees can see the connection to performance
ESOPs seem most powerful when employees have both a financial stake in the company’s success and a clear understanding of how their daily work affects business outcomes.
Management practices still matter
Employee ownership is not a substitute for strong leadership, communication or operational discipline. Instead, the research suggests ownership can make high-engagement management practices more effective.
While not a silver bullet, this research suggests that ESOPs are another available lever for manufacturers who are looking for opportunities to improve their productivity.
What our partners are saying:
Jasper Engines, located in Jasper Indiana, has been an ESOP since 2010. Scott Hoffman, Director of Gas Engine Manufacturing, shared his perspective on the advantages of an ESOP.
“Being an ESOP has helped our continuous improvement culture grow. No matter what position an Associate Owner holds, our ideas matter and those successes show up in the share price. This has helped our manufacturing team understand how small improvements in their process can lead to large financial gains. With this buy in we can all support making sound business decisions.”