FINANCIAL PARTICIPATION
Staff equity does little to promote feelings of ownership
The likelihood of financial participation schemes by themselves encouraging a sense of ownership among the workforce is limited, says a study by the Manchester School of Management at UMIST.
A common goal for many financial participation schemes is to foster feelings of ownership among employees. But, according to Annette Cox, the author of the UMIST study, schemes typically have low levels of participation and only a minority of participants appear to display "changed attitudes and behaviours".
Employee involvement and participation are critical
However, it is not all doom and gloom for advocates of employee share ownership. What Cox has discovered is that there is much more potential for developing a sense of ownership when these schemes are combined with initiatives to increase employee participation. Indeed, there is persuasive evidence that organisations which couple employee share schemes with participation mechanisms may ultimately benefit financially, says Cox.
Which forms of participation work best?
The research suggests that the sharing of financial information and business performance measures via briefings, newsletters and videos is just the first step. As Cox points out: "It does not give employees the opportunity to exercise any upward influence with the prospect of influencing organisational performance." It seems that employees need to have a much greater say.
Cox adds: "Perhaps the role of reward systems and participation mechanisms in fostering employee ownership should begin with a focus on those aspects of working life closest to employees, with participation and reward mechanisms taking the work group or plant as a structural unit."
Summary of key research findings on financial participation schemes
| Issue | Evidence from research |
| Goals of schemes | Reasons for introducing schemes quite varied but "it is dubious how many schemes are actually implemented with ownership objectives in mind". |
| Organisational performance | Much of the research suggests that these schemes have a "positive but marginal effect". |
| Employee behaviour | Impact on absence and retention is "more clear-cut and positive". |
| Employee participation | Share ownership must be accompanied by mechanisms through which employees can influence decision making. But there is "less agreement and research on what constitutes participation and which forms of participation work best to instil a sense of ownership in which circumstances" |
Source: "Achieving a sense of ownership among employees: a critical look at the role of reward systems", by Annette Cox.
A final word
"The scale of change required in organisational culture, systems and structures to create true feelings of employee ownership should not be underestimated and managers may need to be willing to devolve significant amounts of decision-making power to employees." — Annette Cox, Manchester School of Management at UMIST.
Want to know more?
Title: "Achieving a sense of ownership among employees: a critical look at the role of reward systems", by Annette Cox in C. L. Cooper and D. M. Rousseau (ed.), Trends in Organisational Behaviour, John Wiley & Sons, 2001 . . . www.wiley.co.uk