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A Detailed Overview of Employee Ownership Plan Alternatives

Employee Ownership and Employee Motivation

During the early 1980s, the National Center for Employee Ownership conducted an exhaustive investigation of how employees react to being owners. We surveyed over 3,500 employee owners in 45 companies. We looked at hundreds of factors in an effort to determine whether it mattered to employees that they had stock in their company, and if so, when.

The results were very clear. Employees did like being owners. The more shares they owned, the more committed they were to their company, the more satisfied they were with their jobs, and the less likely they were to leave. Naturally, some employees in some companies liked being owners more than others. Individual employee response to ownership was primarily a response to how much stock they got each year. After that, employees responded more favorably if they had ample opportunities to participate in decisions affecting their jobs, worked in companies whose management really believed in the concept of ownership and not just the tax breaks, and were provided regular information about how the ownership plan operated.
By contrast, the size of the company, the line of business, demographic characteristics of the employees, seniority, job classification, presence or absence of voting rights or board membership, percentage of the company owned by employees (as opposed to the size of the annual contribution), and many other factors did not have any impact. Employees looked at the employee ownership plan and asked "how much money will I get from this?" and "am I really treated like an owner?" If they liked the answers to these questions, they liked being an owner.

Conclusion

The continued growth of employee ownership reflects, above all, a changing view of the role of employees in the workplace. To be sure, for some time companies have been saying that "people are our most important resource." This was little more than rhetoric, however, for all but a handful of companies. Investors, capital, technology, and, above all, top management, were really seen as the keys to the company's future. Employees would be laid off or have their compensation limited before these other assets were harmed. Increasingly, however, companies are coming to the view that attracting and retaining good people at all levels, then giving them the authority to make more decisions about more things, is essential to being an effective competitor. In large part, this is a function of technology. The vast amounts of information, and the speed with which it can be processed, leaves companies with little choice but to get more people involved in more things. As people are asked to take more responsibility for the company, it simply makes sense for them to be rewarded accordingly.

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