Key Elements of a Labor Program
EMPLOYEE SHARE OWNERSHIP
Compensation Packages for Redundant Workers
Shares as an Incentive or Reward
Employee Share Ownership Plans
Material and Sources
Employee share ownership can be used as part of the PPI program, as an element of compensation, as an inducement to remain with the operation post-PPI, or as part of an employee buyout. This section outlines those potential roles.
Employee share ownership often has multiple goals, centered around:
- Concepts of redistribution through gain sharing of the wealth generated from the PPI enterprise.
- Reduction of the principal-agent problem (where managers behave in ways that hurt the interests of the firm and its owners). When workers and managers share in the profits of the firm there is likely to be closer alignment among the work force and managers and the owners of the enterprise (the shareholders).
- Reducing opposition to PPI by enlisting support from workers.
Employee share ownership can be used as compensation, as an incentive, or as a means for the employees to purchase significant blocks of shares.
In work force restructuring, employee share ownership can be used in three ways:
- As a form of compensation to displaced workers. Instead of cash, they can receive shares of the enterprise.
- As part of a new incentive or reward package for workers who remain with the enterprise.
- As the basis for management employee buyouts or employee buyouts of units of the enterprise.
