Motivating Employee Owners in ESOP Firms: Human Resource Policies and Company Performance
AbstractWhat enables some employee ownership firms to overcome the free rider problem andmotivate employees to improve performance? This study analyzes the role of humanresource policies in the performance of employee ownership companies, using employeesurvey data from 14 companies and a national sample of employee-owners. Between-firmcomparisons of 11 ESOP firms show that an index of human resource policies, nominallycontrolled by management, is positively related to employee reports of co-workerperformance and other good workplace outcomes (including perceptions of fairness, goodsupervision, and worker input and influence). Within-firm comparisons in three ESOP firms,and exploratory results from a national survey, show that employee-owners who participatein employee involvement committees are more likely to exert peer pressure on shirking coworkers.We conclude that an understanding of how and when employee ownership workssuccessfully requires a three-pronged analysis of: 1) the incentives that ownership gives; 2)the participative mechanisms available to workers to act on those incentives; and 3) thecorporate culture which battles against tendencies to free ride.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0658.
Date of creation: Nov 2004
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
human resources; industrial relations; employee ownership;
Other versions of this item:
- Douglas Kruse & Richard Freeman & Joseph Blasi & Robert Buchele & Adria Scharf, 2003. "Motivating Employee-Owners in ESOP Firms: Human Resource Policies and Company Performance," NBER Working Papers 10177, National Bureau of Economic Research, Inc.
- Douglas Kruse & Joseph Blasi & Robert Buchele & Adria Scharf & Loren Rodgers & Chris Mackin & Richard B. Freeman, 2004. "Motivating employee owners in ESOP firms: human resource policies and company performance," LSE Research Online Documents on Economics 19930, London School of Economics and Political Science, LSE Library.
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
- M40 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - General
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-01-02 (All new papers)
- NEP-BEC-2005-01-02 (Business Economics)
- NEP-LAB-2005-01-02 (Labour Economics)
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