Motivating Employee-Owners in ESOP Firms: Human Resource Policies and Company Performance
AbstractWhat enables some employee ownership firms to overcome the free rider problem and motivate employees to improve performance? This study analyzes the role of human resource policies in the performance of employee ownership companies, using employee survey data from 14 companies and a national sample of employee-owners. Between-firm comparisons of 11 ESOP firms show that an index of human resource policies, nominally controlled by management, is positively related to employee reports of co-worker performance and other good workplace outcomes (including perceptions of fairness, good supervision, and worker input and influence). Within-firm comparisons in three ESOP firms, and exploratory results from a national survey, show that employee-owners who participate in employee involvement committees are more likely to exert peer pressure on shirking co-workers. We conclude that an understanding of how and when employee ownership works successfully 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) the corporate culture that battles against tendencies to free ride.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10177.
Date of creation: Dec 2003
Date of revision:
Publication status: published as Perotin, Virginie (ed.) Advances in the Economic Analysis of Participatory and Self- managed Firms. New York: Elsevier Science Ltd, 2004.
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Other versions of this item:
- Joseph Blasi & Robert Buchele & Richard Freeman & Douglas Kruse & Chris Mackin & Loren Rodgers & Adria Scharf, 2004. "Motivating Employee Owners in ESOP Firms: Human Resource Policies and Company Performance," CEP Discussion Papers dp0658, Centre for Economic Performance, LSE.
- 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.
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
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