Motivating Employee Owners in ESOP Firms: Human Resource Policies and Company Performance

Joseph Blasi, Robert Buchele, Richard B. Freeman (), Douglas Kruse, Chris Mackin, Loren Rodgers and Adria Scharf

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: What 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.

Keywords: human resources; industrial relations; employee ownership (search for similar items in EconPapers)
JEL-codes: M5 M40 O15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-lab
Date: 2004-11
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Working Paper: Motivating Employee-Owners in ESOP Firms: Human Resource Policies and Company Performance (2003)
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