This study seeks to open up an examination of the reasons for implementing an ESO scheme at the enterprise level in Australia, through two interview-based case studies conducted at National Australia Bank Ltd and Palm Springs Ltd. By undertaking these case studies and recording these first-hand accounts of ESO schemes, what is sought here is a better understanding of how such schemes operate within the complex reality of day-to-day business and workplace life. While this research clearly cannot offer definitive conclusions on whether ESO schemes boost workplace productivity and industrial harmony, it can provide new insights into how these supposedly critical objectives of ESO are understood by business managers and employees. Similarly, the effectiveness of the tax concession regime that has been the central mechanism through which ESO has been promoted in Australia cannot be determined on the basis of these interview-based case studies. What can be drawn from these accounts, however, is an appreciation of the role that the regulatory regime hasplayed in these instances.
In pursuing these research objectives, this study thus explores three key issues in Australian ESO policy and regulation, namely:
– whether ESO schemes better align the interests of employees with those of their employer, leading to better enterprise performance and benefits to the community;
– whether the objectives of companies in implementing ESO schemes are primarily ‘ownership objectives’, ‘remuneration objectives’ or ‘workplace change objectives’ (as defined later in this introduction); and
– whether the concessional taxation treatment of ESO schemes provide an incentive for the implementation of schemes in a way that leads to improved enterprise performance.
Our interview-based case studies reveal that in these two companies both management and employees have been relatively uncritical of a nebulous, ’employee engagement’ rationale for the implementation of ESO schemes. In practice, the schemes in these companies have invariably been additions to, rather than substitutes for, other employment-related financial benefits. Along with the presence of more substantial performance-related mechanisms in these organisations, the fact that management in these companies has not sought to measure the workplace performance or industrial harmony consequences of implementing the ESO schemes suggests that they have been introduced on the basis of a fairly broad conception of their value to employees and the organisation, rather than in pursuit of any more specific organisational goals.
With regard to the tax concession regime, the case-studies tend to suggest that while this regulatory incentive does not appear to prompt the introduction of ESO schemes, it does shape the form that they take. While our studies do not preclude the possibility that the tax concession regime might be an incentive for some companies, it is clear from our study that a general belief in the value of aligning employer/employee interests has been a more compelling factor in the implementation of the schemes than has the tax concession regime.