Financial participation schemes: Jeff Hyman
Financial participation schemes aim to provide employees with a stake in the ﬁrm for which they work. Schemes can be classiﬁed into proﬁt-related pay which oﬀers ﬁnancial incentives to employees based on organisation proﬁt levels and employee share schemes which oﬀer employees a property interest in the company as well as longer-term ﬁnancial reward. These forms of ﬁnancial participation are common in both developed and developing countries. Both approaches aim to enhance productivity through their eﬀects on employee performance. Studies on the impact of proﬁt-related pay are inconclusive, though it appears that its use in tandem with other progressive HR techniques can positively inﬂuence employee orientations and performance. The impact of employee share schemes is at worst neutral though positive eﬀects such as reduced labour turnover and expressions of employee commitment are associated with larger allocations of equity and when share schemes are complemented by other forms of employee participation. Nevertheless, under most schemes, share allocations as a proportion of total income are not high and many participants treat their equity as a marginal bonus or dispose of their acquired shares at an early stage.