Do Broad‐Based Employee Ownership, Profit Sharing and Stock Options Help the Best Firms Do Even Better?

28 Pages Posted: 22 Feb 2016

See all articles by Joseph Blasi

Joseph Blasi

Rutgers School of Management and Labor Relations - New Brunswick

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Douglas L. Kruse

Rutgers University

Date Written: March 2016

Abstract

This article analyses the linkages among group incentive methods of compensation (broad‐based employee ownership, profit sharing and stock options), labour 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 labour practices self‐select into the 100 Best Companies firms sample, which should bias the analysis against finding strong associations among modes of compensation, labour 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.

Suggested Citation

Blasi, Joseph R. and Freeman, Richard B. and Kruse, Douglas L., Do Broad‐Based Employee Ownership, Profit Sharing and Stock Options Help the Best Firms Do Even Better? (March 2016). British Journal of Industrial Relations, Vol. 54, Issue 1, pp. 55-82, 2016. Available at SSRN: https://ssrn.com/abstract=2735199 or http://dx.doi.org/10.1111/bjir.12135

Joseph R. Blasi (Contact Author)

Rutgers School of Management and Labor Relations - New Brunswick ( email )

Piscataway, NJ 08854
United States
732-445-5444 (Phone)
732-445-2830 (Fax)

Richard B. Freeman

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
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University of Edinburgh - School of Social and Political Studies ( email )

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Harvard University ( email )

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United States
617-868-3900 (Phone)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE

Douglas L. Kruse

Rutgers University ( email )

Piscataway, NJ 08854
United States
908-445-5991 (Phone)
908-445-2830 (Fax)

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