This research presentation was hosted by the Federal Reserve Bank of New York, in partnership with the Ford Foundation. The event explored how some companies are seeking to increase low- and moderate-income workers’ wealth through investments in ownership and employee benefits. Focus was on how efforts to improve the wealth of low- and moderate-income workers … Read More
Despite substantial scholarly attention to workforce demographic diversity, existing research is limited in understanding whether or in what contexts firm-level racial diversity relates to performance and workforce outcomes of the firm. Drawing on social interdependence theory along with insights from social exchange and psychological ownership theories, we propose that the use of broad-based stock options … Read More
This presentation explores two growing employee-owned companies in Africa, Sokowatch and mPharma, through dialogue with the companies’ CEOs. The presentation was delivered at the 2021 Beyster Symposium.
This is a survey course that explores the variety of ways that businesses can compensate employees with shares of equity, profits, or gains and the human resource management, employment relations, organizational and individual motivational issues that such practices raise. The class will use the Harvard Business School case study method where each class will be … Read More
Even before the pandemic, many workers struggled to build wealth. Divisions between men and women, and between white households and households of color, are particularly striking. The pandemic has exacerbated and heightened awareness of these inequities, and there is a mounting sense of urgency to find practical solutions. Increasing participation in business ownership can help … Read More
In this workshop, “Research and Teaching about Equity Compensation, Employee Share Ownership and Profit Sharing in Organizations,” expert professors describe a variety of different ways they teach about employee ownership and equity compensation in their university courses–and the resources, videos, and case studies that they use. This workshop features Daphne Berry, Joseph Blasi, and Ed … Read More
At the center of the ongoing debate about the causes and cures of inequality in America today is the vast difference in wealth between owners and workers. As many have noted, that gap was not nearly as large in the middle of the twentieth century as it has become in the first two decades of the 21st century, where owners and other executives make many multiples of what workers make – largely through grants of stock in lieu of salary.
Research linking broad‐based employee stock ownership (BESO) with firm performance continues to receive considerable attention both in and outside the field of management. Despite the evidence being generally positive regarding the BESO–firm performance relationship, there has been a relative dearth of research providing insights into the circumstances surrounding the effectiveness of BESO. With this research … Read More
This 2019 presentation shows the great degree of support among Democrats, Republicans, and Independents for employee ownership. Nearly three-fourths of respondents in a national survey said they would rather work for an employee-owned company than for shareholders or the government. That view transcended ideological and partisan divides, with 74 percent of Democrats, 72 percent of … Read More
A major theoretical objection against employee ownership is that workers become inadequately diversified and exposed to excessive financial risk. Recent theory concludes that 10-15% of a worker’s wealth portfolio can be prudently invested in employer stock provided the rest of the portfolio is properly diversified. This paper analyzes employee share ownership in U.S. family financial … Read More
Purpose The purpose of this paper is to review the historical background for broad-based ownership in the USA, the development of forms of employee ownership and profit sharing in the USA, the research literature on employee ownership and profit sharing and related employee participation, the development of policy and options for new policies. Design/methodology/approach It … Read More
In recent decades, workers’ paychecks have remained stagnant, despite increases in productivity. At the same time, returns to wealth have increased. Strategies that transform workers into owners, such as employee share ownership strategies, have the potential to give working people a stake in our growing economy and include them in the nation’s prosperity. With employee … Read More
This handbook investigates ‘member-owned’ organizations, whether consumer co-operatives, agricultural and producer co-operatives, worker co-operatives, mutual building societies, friendly societies, credit unions, solidarity organizations, mutual insurance companies, or employee-owned companies. Such organizations can be owned by the consumers, producers, or employees—whether through single-stakeholder or multi-stakeholder ownership. ‘Employee-owned’ business means businesses where a significant proportion of the … Read More
When Workers Become Owners Professors Joseph Blasi, Richard Freeman, and Douglas Kruse explain how sharing the ownership or profits of a company with workers can improve productivity, pay, and work life quality – all while reducing economic inequality. Bonus – Jump on the Bandwagon Professors Blasi, Freeman, and Kruse stay post-interview to discuss why trade unions, business schools, and … Read More
This article analyses the linkages among group incentive methods of compensation (broad‐based employee ownership, profit sharing and stock options), labour practices, worker assessments of workplace culture, turnover and firm performance in firms that applied to the ‘100 Best Companies to Work For in America’ competition from 2005 to 2007. Although employers with good labour practices … Read More
The idea of workers owning the businesses where they work is not new. In America’s early years, Washington, Adams, Jefferson, and Madison believed that the best economic plan for the Republic was for citizens to have some ownership stake in the land, which was the main form of productive capital. This book traces the development … Read More
Even the rich are admitting that inequality is bad for business…
The idea of workers owning the businesses where they work is not new. In America’s early years, Washington, Adams, Jefferson, and Madison believed that the best economic plan for the Republic was for citizens to have some ownership stake in the land, which was the main form of productive capital. This book traces the development of that share idea in American history and brings its message to today’s economy, where business capital has replaced land as the source of wealth creation.
This special edition of The Nation brings together a wide range of articles on new ways to shape capitalism, and to work on economic recovery.
What can be done to reverse the economic disparity in our nation and restore prosperity for all? This paper lays out a policy reform that will help restore the link between economic growth and the earnings of workers so that the recovery re-establishes a prosperous middle class. The reform encourages firms to develop broad-based incentive compensation systems that link employee earnings to the performance of the firm. This reform would give employees access to the capital-related earnings of their companies comparable to that of the senior executives who run these firms.
Apart from the extreme cases that get publicized, are employee stock ownership plans generally good or bad for workers?
Between one-third and one-half of employees participate directly in company performance through profit sharing, gain sharing, employee ownership, or stock options.
Group incentive systems have to overcome the free rider or 1/N problem, which gives workers an incentive to shirk, if they are to succeed.
This paper addresses whether the risk in shared capitalism makes it unwise for most workers or whether the risk can be managed to limit much of the loss of utility from holding the extra risk.
The authors found that companies with broad-based stock option plans (here, defined as those where most nonmanagement employees receive option grants) had statistically significant higher productivity levels and annual growth rates than public companies in general and their peers.