Recognizing Emotionally Invested Team Members And Nurturing “Emotional Ownership” For A More Resilient Firm

Philip's daughter loves her car. At 18, she treats her Volkswagen Tiguan like a trusted steed – adorned with carefully chosen stickers and air fresheners and giving it a wash after every hike. If she uses "Dad's car" on the other hand, she frequently leaves it almost out of gas, covered in mud, and parked where there is a risk it will be towed in just 2 hours. It's not her car. Legally, neither is the Tiguan. Both vehicles belong to Philip, and technically, she doesn't even own the air fresheners — she used Philip's credit card to buy them.

Consider the difference between an "owner" and a "user". An owner not only takes a lot more care of their property, but they also view it as an extension of themselves and their identity. That's why Philip's daughter covers 'her' car with stickers that display and convey who she is. Owners also take a long-term view of their prized possessions and are willing to invest in their long-term improvement and health. No one buys new tires for a rental car. Finally, owners are willing to go through a lot of hardship before they abandon their possessions. They will endure more losses and lost weekends before they surrender what they have created.

The feeling of ownership, as we observed with the car, is not always precipitated or perpetuated by legal ownership. There are many examples of advisory firm employees who behave like owners in the sense of dedicating effort and emotion to their firm well beyond their job descriptions, and there are also many examples of owners who do not seem to care much about what is legally theirs. We will not have to search far to find an employee who is in the office this weekend and a 'partner' (owner) who has not been there since Labor Day.

Emotional ownership plays a crucial role in shaping behaviors within financial advisory firms. Personality traits and life experiences heavily influence how individuals perceive their stake in the firm’s success. Cultivating a culture that nurtures psychological ownership, regardless of formal titles, can drive engagement and motivation. Key aspects of how emotional ownership influences employee behavior include:

• Who Owners Are: Personality and life experiences significantly shape whether someone demonstrates ownership behavior. Research by Jon Pierce, Tatiana Kostova, and Kurt Dirks, published in 2001 in the Academy of Management Review, has suggested that emotional ownership greatly enhances team members' productivity, effort, and willingness to take on leadership roles.
• How Leadership Is Identified: The visible expression of ownership behavior is crucial for recognizing leaders within a firm. In research by Rana Muhammad Naeem et al., published in 2021 in Personnel Review, those who instill a sense of purpose and promote innovation were found to inspire their teams, motivating employees to take on greater responsibilities even without formal ownership.
• How Succession Planning Is Supported: Research from a 2014 paper in the Small Business Institute Journal by Raj Mahto, Saurabh Ahluwalia, and Dmitry Khanin suggests that a strong sense of emotional ownership is essential for fostering commitment among successors, facilitating smoother leadership transitions and underscoring its significance in family businesses.

The traditional model of ownership and leadership in advisory firms involves selling actual legal ownership – shares or units of equity. This reflects both responsibility and commitment, with many professionals willing to take on financial risks for a share in the firm's success. However, as both the cost and accessibility of equity rise, fostering emotional ownership becomes increasingly important. If we can inspire the behavior of owners without giving away equity, firms can create a more engaged and motivated team overall. At the same time, it's essential to reserve legal ownership for those who consistently demonstrate true ownership behavior.

What Does It Mean To Behave Like An Owner?

Behaving like an owner in a financial advisory firm means adopting a mindset deeply committed to the firm’s long-term success. It involves taking personal responsibility for the firm's outcomes, actively contributing to its growth, and aligning one's actions with its mission and values. Essentially, the firm becomes an extension of the person's own identity. This mindset goes beyond job responsibilities and reflects the following key characteristics:

• Accountability and Responsibility: Owners take full responsibility for their work and the overall success of the firm, owning both their decisions and outcomes.
• Leadership and Influence: Owners are leaders who set standards, inspire colleagues to elevate their performance, and offer meaningful mentorship. They understand that motivating others and leading by example are critical to the firm's success.
• Investment Mindset: Owners focus on sustainable growth and financial health by making mindful decisions about costs, revenues, and profitability. They are willing to invest time and resources, prioritizing long-term rewards over immediate gains.
• Growth and Improvement: Owners want to see the firm grow and thrive, much like a parent wants to see their child grow. They constantly strive to make improvements rather than settle on maintaining the status quo.
• Commitment to the Firm's Best Interest: Owners align their actions with the firm's mission and goals, prioritizing the success of the firm, even when it means putting the firm's needs ahead of their own.
• Risk-Taking: Owners understand that calculated risks are necessary to drive innovation and growth.

Research by Mahto, Ahluwalia, and Khanin underscores the importance of emotional ownership in cultivating commitment among successors. It highlights that both founder and successor engagement is essential for effective leadership transitions. When successors feel emotionally invested, their commitment increases, leading to smoother transitions and sustained success. Notably, even after selling their businesses, founders often maintain a strong sense of responsibility, illustrating the enduring impact of emotional ownership.

Developing this ownership mindset, rooted in both personality and life experiences, plays a key role in shaping performance, leadership, and firm culture. Although these behaviors are highly desirable for any firm, we all have seen firms where there are non-owners who exhibit them and owners who don’t.

The Ownership Behaviors

Just as a dedicated renter might repaint the walls to make their house look better while a neglectful owner may not bother to maintain their own front yard, the behaviors associated with advisory firm ownership won't always follow expectations. Some employees will exhibit ownership qualities and commitment despite lacking legal ownership, while some partners are 'coasting' and investing little effort into their firm. This dynamic creates a natural set of quadrants:

In every advisory firm, employees can be found at different points within these quadrants. Some, like entry-level staff or those uninterested in equity, show no ownership behavior and lack legal ownership (bottom left). Others, like the ideal owner, both hold ownership and act in ways that reflect it (top right). The real risk lies in the top left – owners who don't behave like owners – while non-owners who demonstrate strong ownership behavior (bottom right) are valuable contributors and potential future partners.

A non-owner employee who behaves like an owner is often a prime candidate for partnership. This is because individuals who demonstrate psychological ownership – taking initiative, showing dedication, and acting in the firm's best interest – are already displaying the qualities of a strong partner, even without a formal equity stake in the business. For example, an entry-level advisor might show remarkable dedication to the firm's success, benefiting the organization through their high performance.

Conversely, if partnership opportunities are not communicated or fulfilled, this motivated individual may not feel sufficiently rewarded, which can lead to the individual facing burnout and seeking opportunities elsewhere. This demonstrates the importance of having a transparent career trajectory and maintaining open communication about goals. Emotional ownership reflects deep intrinsic motivation, often reflecting a desire for recognition and formal ownership. It’s similar to the saying, "Dress for the job you want, not the job you have." But if the "job you want" starts to feel out of reach, a person's motivation can fade, and they’ll just show up in a T-shirt.

What Causes Someone To Behave Like An Owner?

Ownership behavior goes beyond a legal designation; it reflects a mindset of accountability, leadership, and dedication to a firm's success. At its core, ownership behavior is shaped by a combination of personality traits and life experiences – a blend of nature and nurture. Some people are naturally predisposed to leadership roles, while others may grow into them through mentoring or overcoming challenges.

How Personality ('Nature') Can Influence Ownership Behavior

Personality theory provides valuable insights into why certain individuals exhibit strong ownership qualities. The Big Five personality model remains a dominant framework for understanding behavior in professional settings. Research published in 2023 by The National Institutes of Health (NIH) indicates that higher levels of conscientiousness, extraversion, and openness to experience correlate with stronger feelings of psychological ownership.

Conscientious individuals take initiative, demonstrate reliability, and show strong commitment – traits that are crucial for fostering ownership behaviors. Extraverts build relationships and influence others, which deepens their emotional investment in the organization. Meanwhile, openness encourages innovation and a proactive mindset. Psychological ownership is further nurtured through environments that offer autonomy, decision-making, and opportunities for personal growth – factors that resonate particularly with those high in conscientiousness and openness. Such environments enhance the sense of ownership by allowing individuals to invest themselves fully in their roles.

According to the 2001 research by Pierce, Kostova, and Dirks, psychological ownership emerges when individuals perceive their job or organization as part of their own identity. This sense of ownership can be triggered by control over the object, intimate knowledge, or personal investment (as discussed in more detail later). These feelings enhance commitment, responsibility, and loyalty – key elements for sustaining ownership behaviors in organizations.

The Role Of Life Experience ('Nurture') In Ownership Behavior

Despite their usefulness, personality assessments often suffer from response bias, as individuals may provide socially desirable answers.  While personality traits provide a foundation, many experts emphasize the importance of life experiences, which may offer a more reliable measure of ownership behavior. Life experiences reflect real-world actions and decision-making over time, offering a clearer picture of how an individual truly engages with accountability, leadership, and dedication. Mentorship, personal adversity, and professional challenges can all shape a person's leadership style and their sense of ownership over their work.

For instance, individuals who benefit from strong mentorship or overcome significant challenges often develop ownership behaviors, as these experiences build resilience and a sense of responsibility. According to the 2021 research by Naeem et al., leaders who foster a sense of purpose and encourage innovation were found to inspire their teams to adopt similar behaviors, motivating employees to take on greater responsibilities, even without formal ownership.

In our consulting experience, individuals raised in a family business are also highly likely to develop an ownership mentality. For them, these behaviors are often instinctive, learned through observation and experience as they watch their parents navigate the responsibilities of ownership.

Owning The Job

The sense of 'ownership' doesn't always extend to the entire firm; sometimes, it just applies to a specific area. For example, consultants have seen professionals who show little interest in a firm's overall strategy until a certain topic, like the CRM system, comes up. Suddenly, their energy shifts and a spark in their eyes becomes obvious.

It's not uncommon to find someone who 'owns' a particular part of the business, whether it's the reception area, the financial planning process, the lease-versus-buy spreadsheet, or the annual client appreciation event. In these areas, they exhibit the behaviors we associate with ownership: passion, a willingness to invest extra time and effort, and a proactive, enterprising outlook toward the future.

Several key factors can contribute to this sense of being in charge:

• Control Over Time: Having had significant control over the area or job for a long time. They may not be a manager in the firm, but they are the ones who 'rule' their domain – whether it's the CRM system or the reception area.
• Expertise and Identity: Superior knowledge in a particular area can also lead to a sense of ownership. Not only do these individuals possess expert-level skills, but they also derive a sense of identity and status from their deep understanding of the system.
• Continuous Responsibility: When someone has been in charge of the resource for a long time – without challenge or oversight – they naturally begin to view themselves as the 'owner' of that resource. For example, if an employee is the only expert in using the firm's accounting system, they probably consider it their territory.

While we want more employees who take ownership, we certainly don't want owners who claim a piece without bringing much to the table – because nobody wants a potluck guest who shows up empty-handed!

When Owners Don't Act Like Owners

When a business owner lacks a keen sense of responsibility and emotional attachment to the firm, it poses a significant challenge to the firm's culture. If the owners are neglectful, the team can't be expected to act any differently. Research by Nicolai Foss et al., published in the Strategic Management Journal in 2020, shows that concentrated ownership (i.e., having large percentages of firm equity) can enhance decision-making and performance when owners are skilled and have a clear vision. However, as Foss’ article points out, inexperienced owners – who fail to ensure optimal asset allocation, effective governance, or timely ownership transitions – can diminish a company’s value. This underscores the critical importance of having effective ownership in place. As Foss notes, "Ownership competence problems arise from having the wrong owners… We stress that value is created when those who possess competence also assume ownership."

These "absentee owners" that no firm wants to have are mostly the product of the following conditions:

• No Sense of "Creation": One of the acts that cause individuals to feel that they own something is the act of creation – they perceive the things they create as their own. We refer to this as "our" article because it didn't exist before we wrote it. Madison started the first draft, and Philip initially thought, "I need to contribute to Madison's article", since he hadn't begun writing yet. Now that he has, he truly feels that it's ours.
• No Sense of Control: If a person rents a house for a while, they will inevitably call it "my house." Controlling something results in a sense of ownership.
• Lack of Effort: The more effort a person puts into something, the more they feel they own it. The harder it is to obtain, the more it's treasured. Name a star for $50 on the internet, and you probably wouldn't be inclined to call it "my star". But dig a hole and plant a tree in a park, and it will feel much more like "your tree" for a long time.
• Lack of Ownership Culture: When we are surrounded by neighbors who maintain spotless lawns, we are more likely to do the same. If more people behave like owners, we are more likely to do the same. And the opposite is true – the more we observe owners not caring, the more we will as well.

Ownership mentality is precious, but as with every passion, it's a fire we should be careful with. Having too many owners, for instance, can dilute responsibility and complicate decision making, ultimately harming the firm's overall success.

Too Many Owners?

Employees who act like owners can be incredible contributors and may identify themselves as future leaders, perhaps even as actual owners. However, advisory firm employees who feel a sense of ownership – whether over a specific function or the firm itself – can also become obstacles to change, resisting strategies that leadership wants to implement.

It is not unusual to see an employee who identifies as the emotional owner of the firm's existing CRM system resist adopting a new system they're not familiar with. They will defend the legacy system with the same passion as an owner protecting their property from an intruder. For this employee, this is their property. While this sense of virtual ownership can be helpful when the firm needs the team in the office on a Sunday, it can also create 'fiefdoms' that become exceedingly difficult to manage.

Owners have strong opinions about their property. If someone wanted to paint Seattle's City Hall in a poison green color – I'd say, go ahead. But if they wanted to repaint my house that color – "Wow! Wow! Wow! Back off, buddy!" Employees who feel like firm owners will often have exceptionally strong and passionate views about the firm they believe they've helped create. When actual firm owners don't share those same views, they're likely to encounter some incredibly determined resistance.

Owners will naturally be disappointed if they are not treated as owners, especially when they’ve invested significant time and effort into the firm. Fostering emotional ownership among non-owners can be highly valuable; however, it can also create expectations for the same respect, recognition, and rights that come with legal ownership. While it's great to inspire such commitment, managing these expectations carefully is essential to avoid frustration or conflict.

Owners may not want to purchase ownership. Those who already identify as owners of the business may not be pleased to have to purchase more ownership with money. In fact, they may feel that they are buying their own work, and that will be seen as unfair. In other words, having employees who are so committed to the firm that they feel like owners is amazing, but it can be a lot like having partners because these employees also want to be included in the firm's decision-making processes, recognized for their efforts, and provided with some level of control. Otherwise, they may react the same way an owner does when someone is trying to take their possession.

Actionable Takeaways For Advisors To Encourage Emotional Ownership:

Emotional ownership is a powerful motivator and should not be left to chance. Every firm should carefully identify those with an ownership mentality and foster their connection with the firm. Here are a few ways to do so:

• Develop Emotional Ownership Among Non-Owners: Non-owners who feel responsible for the firm's success can be just as invested as owners. Involving non-owners in decision-making, offering clear career paths, and linking their contributions to firm-wide goals can help foster a sense of belonging and purpose, even without equity.
• Mentor Owners to Act Like Owners: Some owners may not fully embrace their role, which can affect firm culture. Mentorship focused on accountability, firm stewardship, and team morale can guide these owners toward leading by example, prioritizing the firm’s success, and aligning with its values.
• Foster Accountability Across the Firm: Regular performance reviews for both owners and non-owners can help promote accountability. Address any owners who don't act like owners and publicly recognize non-owners who show strong emotional ownership. Accountability and recognition can boost emotional investment in the firm's success.
• Encourage a Culture of Shared Success: Whether or not employees have ownership stakes, fostering the idea that success is collective can strengthen emotional ownership. Highlight how non-owners who take ownership of their responsibilities can positively impact firm outcomes.
• Incentivize Performance Beyond Ownership Status: A performance-based incentive system tied to both individual achievements and firm profitability could help demonstrate that everyone’s contributions are valuable. Non-owners with emotional ownership may feel more motivated to excel, even without equity.

By focusing on emotional ownership – whether through mentorship, accountability, or rewards – firms can strengthen their team’s commitment, create a culture of shared success, and foster greater long-term loyalty from all employees, regardless of ownership status.

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Instead of questioning whether only those with the potential to feel and act like owners should be recruited and developed, consider how powerful it would be if everyone on the team contributed with the same commitment and passion as an owner. What kind of energy and innovation could arise if each individual felt a genuine sense of ownership?

The answer to us is clear: Seek the spark of ownership in every team member. It's a rare and valuable quality that, when nurtured, can drive the firm's success. However, it’s crucial for firms to be genuine in fostering that spark. If ownership behavior is encouraged, those contributions must be recognized and respected. Failing to do so can lead to frustration – partners may feel undervalued and employees may feel overlooked, ultimately hindering the firm's cohesion and growth.

On the other hand, when ownership is embraced and celebrated, firms can unlock a powerful sense of shared purpose. Team members who feel valued and connected to the firm's success will be more motivated, innovative, and committed to its long-term growth. By fostering an environment where ownership thrives, firms can build stronger teams, inspire greater collaboration, and position themselves for lasting success!