New Research: Employee Ownership, Productivity, and Employee Satisfaction

In a December 13 article in the online Harvard Business Review, Alex Bryson (University College London) and Richard Freeman (Harvard University) note that "Since the mid-2000s, broad-based shared capitalist programs — in other words, programs where firms offer profit sharing and employee ownership to nonmanagers as well as managers — have spread to cover more employees than traditional forms of individual performance-based pay in Europe and the United States."

They say that the state of research is now sufficient to address—and refute—the three main economic arguments against profit sharing and employee ownership: the so called "free rider" problem (where individual employees do not work hard because they can rely on the efforts of others), the "line of sight" problem (where employees cannot see the impact of their own behavior on company success), and risk aversion. They describe these arguments as "debunked," and also cite findings showing increased productivity by shared capitalist firms and higher levels of employee satisfaction.