The Effects Employeeownership on Operational & Financial Performance

In the automobile industry, profit sharing agreements are written into collective bargaining contracts (Bureau of Labor Statistics, 1984, p. 54). Under arrangements just like the one observed within the automobile industry, firms share profits with their production employees at predetermined rates, as soon as the minimum level of profits specified in the collective bargaining agreements had been attained. In such arrangements, the production employees share from the profits; however, they are not required to share in operational losses.

A second process of profit sharing for production employees involves employee stock ownership. Though any production employee is often free to go to the industry to invest in stock in his or her publicly held employing firm, this program of profit sharing involves formal organizational programs which encourage and support employees inside purchase of business stock. These programs (and this method to profitsharing) are generally referred to as employee stock ownership plans##ESOPs (Doyle, 1991, p. 77). Under this method, employees share inside the profits with the company both through dividends paid and via increased market values of stocks held. Employees do not participate directly in operational losses; however, declines in marketplace values stands out as the result of these kinds of losses.

The problem, therefore, is the determination in the outcomes a adjust to employee ownership has on employee motivation and organizational productivity. If possible, it's also desirable to obtain an understanding of why this sort of changes come subsequent to the advent of employee ownership, and to project how extended this kind of changes may perhaps endure. The general difficulty described above was investigated in this look for study. The particular purpose on the understand was to assess the final results of employee ownership on organizational profitability and performance.

 

 

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