“Do Broad-based Employee Ownership, Profit Sharing, and Stock Options Help the Best Firms Do Even Better?”

Citation:

Blasi J, Freeman R, Kruse D. “Do Broad-based Employee Ownership, Profit Sharing, and Stock Options Help the Best Firms Do Even Better?”. British Journal of Industrial Relations . 2016;54 (1) :55-82.

Date Published:

2016

Abstract:

This paper analyzes the linkages among group incentive methods of compensation
(broad-based employee ownership, profit sharing, and stock options), labor 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 labor practices self-select into the 100 Best Companies firms sample,
which should bias the analysis against finding strong associations among modes of
compensation, labor policies, and outcomes, we find that employees in the firms that use group
incentive pay more extensively participate more in decisions, have greater information sharing,
trust supervisors more, and report a more positive workplace culture than in other companies.
The combination of group incentive pay with policies that empower employees and create a
positive workplace culture reduces voluntary turnover and increases employee intent to stay and
raises return on equity.
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Last updated on 07/26/2017