ABSTRACT
The following three chapters deal with management-initiated involvement. This chapter concentrates on initiatives that offer employees a financial stake in the organisation. This is assumed by proponents to influence the behaviour of participants. Plans include profit-sharing, which provides employees not with an equity release, but with a monetary bonus contingent on achieving designated levels of profitability or group performance. Profit-sharing is common in many countries and numerous studies confirm a positive impact on productivity, though often with reservations.
Employee share schemes are also widespread. These offer free shares to employees or allow them to purchase shares at a discounted price or to access designated savings schemes, allowing participants to convert savings into company equity. Though these are popular with employees and can help combat income inequality, unions are sceptical because they believe that such schemes can harm collective unity and load financial risks onto employees while offering little opportunity to exert pressure on shareholders.
Employee ownership offers majority shareholdings to employees and is less common. Examples include cooperatives, employee buyouts and company models such as the John Lewis Partnership. Smaller employee-owned companies can be vulnerable to lack of capital and market pressures.
