Business management scholars have propositioned employee share ownership as a concept bearing different perspectives. Business management practitioners have implemented the model in varying degrees suiting their organizational needs depending on the context of the organization at the particular time. Empirical research on the impact, role, and the position of employee share ownership (ESO) has produced varying results leading to far reaching conclusions as to the importance and significance of the ESO on an organization and especially at a time when a firm is undergoing through crisis. The concept of employee share ownership has led to the development of employee share ownership plans which are implemented as direct stock/share allotment, bonuses, or profit-sharing models and plans. The employer or the principal capital holder bears an exclusive discretion in making the decision of who would receive any of these options.
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Different scholars have substantiated the existence of some evidence linking better firm’s performance with employee share ownership plans and schemes. The context of this topic is to understand how the concept of employee share Ownership is employed in different countries and whether it impacts organisational value and behavior. Several organisations in the contemporary world have implemented this concept with great success (Bradley, Estrin, & Taylor, 1990; Pendleton, 2006). However, not every organisations which has implemented ESOPs has succeeded. Most of the research relating the implementation of ESOPs and both organizational value and behaviour have also not been very clear in their conclusions. Most of these research works have attributed this connection to the existence of other factors (Pan, 2021; Derksen, 2020; Poutsma, Ligthart, & Poutsma, 2017; Whitfield, Pendleton, Sengupta, & Huxley, 2017; Kaarsemaker & Poutsma, 2006). It is with this in mind that the writers intend to clearly present ESOPs as a strategy and as an incentive plan aimed at the employees, so as to boost their morale, increase motivation, and enhance commitment, as a reward, an investment option, and for their recognition.
It is when it is premised that, committed employees will gain and benefit directly when the stock value of the firm increases in financial value for a win-win situation resulting to alignment of employee behavior to the expected value generation. Further to this, it can also be argued that employee stock ownership is a financial strategy aimed at minimizing financial outflows. The chapter will give relevant examples of how employee share ownership is carried out in different countries, how companies can use ESO to enhance productivity, faster growth, higher levels of profitability, ensure stability and a higher survival rate in turbulent market environments and lower turnover rates — benefits which spreads to all qualified and willing stakeholders which may include retirement accounts of employees and owners. For these purposes therefore, the terms employee share ownership (ESO), employee stock option plans (ESOPs) and employee share ownership schemes will be used synonymously. The literature reviewed will range from classical to contemporary literature in the area. The selection criteria of the presented documented information are on the basis of the chosen countries where the concept is being practiced and the thematic area of strategy and employee behavior towards value creation. The countries range from the US and EU where it is well documented and extensively legislated, India and south Africa whose approach to the concept slightly differs from the rest and Kenya and Ghana which have limited legislation of the concept but heavily borrow from the common law.
Employee share ownership is also known as employee stock ownership, or employee stock or share ownership. It deals with allocating the workers some amount the shares of the company. Workers would participate in share acquisition through a stock option plan, however such stock options plan at times would be selective, not allowing all the employees to participate. Hieu (2020) is of the opinion that when as organization adopts an employee share ownership plan, or scheme, the employees instantly become shareholders and this changes the power relationship between the management and the workforce. This tends to give workers more bargaining power and the realization that they work for themselves and hence they don’t just have to comply by performing their tasks to the basic required minimum but enhancing their contribution to have a better financial reward. It can also help in resolving some human relations conflicts since the component of the ‘ownership’ makes the worker have a different approach and attitude to their work. Gamble (2000), Faccio and Lang (2002) however, postulated that employee ownership can also be regarded as a strategy by managers in order to safeguard their positions. In the context of the managers owning shares through an employee share ownership plan or scheme, the shareholders would have a challenge in organizing a contrary vote to the managements proposals or even at times they may find it hard to get the requisite momentum to change corporate-level managers. It is in this line of argument that some studies found out that industry reacts adversely when the scheme or plan for employee share ownership is viewed as an entrenchment by the management (Dhillon & Ramírez, 1994; Hallock, Salazar, & Venneman, 2004; Lamberg, Savage, & Pajunen, 2003).