Employee Share Ownership And Organisational Commitment

1006 words - 5 pages

For the past few years, large companies around the world have adopted Employe Share Ownership Plans (ESOPs) as one of their reward systems. This employee ownership scheme is also known to have positive impacts to employees attitudes as many scholars found that ESOPs can help to align employees’ interest with those of shareholders, increase employees’ commitment and satisfaction, hence increasing their loyalty and reducing turnover rate (Klein, 1987; Culpepper, Gamble and Blubaugh, 2004; Buchko, 1992). However, in their article, some scholars found that ESOPs do not necessarily have positive outcomes. Often, Lack of communications and supports from top management regarding the scheme and ...view middle of the document...

Moreover, she also suggested that employees satisfaction and commitment levels can be further enhanced by giving sufficient information to employees regarding the ownership scheme, showing full managerial supports and commitments to ESOPs and contributing a considerable amount of cash to the plans to show the company’s seriousness towards the ownership scheme.
In their article, Culpepper, et al (2004) utilised the three-component model of organisational commitment that was originally developed by Meyer and Allen (1991). This model is somewhat different to the model that was developed by Klein (1987) because according to Meyer and Allen (1991), organisational commitment is experienced by the employee as three simultaneous mindsets encompassing: ‘affective commitment’ (emotional attachment), ‘normative commitment’ (a feeling of obligation to the organisation) and ‘continuance commitment’ (perceptions of cost of leaving the company). Culpepper, et al (2004) conducted the research by sending survey instruments to 900 pilots from three major US-based airlines and with the help from labour union, they managed to achieved 35.6% participation rates. Their studies revealed that the large monetary value from ownership scheme would only increase employees satisfaction but not their commitment to the organisation. Both employees satisfaction and commitment level increase if the ownership scheme give them a sense of empowerment, which was associated with normative commitment.
Another similar research was also conducted by Buchko (1992) where he sent several surveys questionaries to a sample of 181 employees from U.S. based media company. He employed different research method than Culpepper, et al (2004), where he created several important variables based on the response given from participants. From those data, he then developed an equation to measure the relationship between the value of ownership, the perceived influence of ownership and commitment level of employees. He claimed that without the perceived influence from ownership, the financial value of ESOPs alone would not increase employees organisational commitment.
The findings from two previous articles are quite similar in a way that the perceived participation and involvement of employees in the company when ESOPs are adopted play an important role...

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