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 restricted employees participatory rights in the firm decision-making even after the implementation of ESOPs are claimed to be the reasons (Sengupta, Whitfeld and McNabb, 2007; McCarthy and Palcic, 2012; Pendleton, McDonald and Robinson, 1995). This paper will compare and contrast their research methods as well as their findings regarding the relationship between ESOPs and employees commitment.
A range of studies have been conducted to test whether the existence of ESOP will generate high level of organisational commitment. In her studies, Klein (1987) demonstrated three conditions necessary for ESOPs to have desirable impacts on employees attitudes by using three theoretical model that was developed by her. The three models are: first, ’the extrinsic satisfaction model’, employee satisfaction is positively correlated to financial benefits they will achieve from ownership scheme; second, ‘the instrumental satisfaction model’, employee will be more satisfied when they are more involved in the organisation decision-making process from their ownersh...
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...variable (employee performance). From their research, ceteris peribus, ESOPs do not necessary have positive impacts to employees commitment level due to what the authors refer as ‘theory of unmeet expectation’, meaning that employees commitment level would decrease because organisations were unable to facilitate employees high participatory rights expectation from the ownership scheme.
The result from Sengupta, et al’s article was also supported with the findings found on McCarthy and Palcic (2012) where they conducted a research that consist of 711 participants on a company that has adopted ESOPs for the last 9 years. Those scholars found that ESOPs had failed to create a sense of psychological ownership among employees due to lack of participation and involvement in the decision-making despite large shares allocation, 14.9%, and financial returns from the scheme.
... Factors affecting employees’ organizational commitment–a study of banking staff in Ho Chi Minh city, Vietnam. Journal of Advanced Management Science 2(1), 7-11
...ts stakeholders and stabilized the internal culture. If compensation for the organization’s executives were tied to designated performance indicators for ARC (Lytle, 2013), the organization may actually operate more efficiently and effectively.
employee stock ownership can create a burden of long-term planning for the sustainability and repurchase program; not all employees can be able to purchase stock. According to the case, Atul believes in a total compensation between 0-10 percent based on employee’s salaries could play as a “trade-off” for a “supportive and respective work environment” (Calo et al., n.d.).
The values of Phi and Cramer’s V are significant, p’s < .05, which indicates a weak relationship between compensation and commitment to agency (Fletcher,
...ng conditions as well as overall organisational performance. Due to being intrinsic rather than extrinsic the company does not incur a high cost and thus would be able to retain and motivate employees further.
Employment relationships may have economic and social exchange. When it is an economic exchange, employees receive only contractual inducements and they are likely to confine their contributions to those prescribed by the contract. When the employment relationship is a social exchange, employees receive positive, beneficial treatments from the organization. This in turn creates obligations on the part of employees to reciprocate in positive beneficial ways (Settoon et al., 1996). Since OCB is generally discretionary, it is a social resource that can be exchanged by individuals, who have been the recipients of social rewards (Foa & Foa, 1980; Moorman, 1991). Therefore when the employment relationship is a social exchange, employees are more likely to engage in OCB (Organ, 1988).
In this assignment, both control in the workplace and work satisfaction dimensions will be analysed at length. Relating them both to the case study of the Sports Direct Company and other relevant organisational theories; such as scientific management. Sports Direct was founded in 1982 by Michael Ashley in Maidenhead. In 18 years, ‘Mike’ Ashley expanded internationally opening stores in Belgium, and just seven years later listed his company on the London stock exchange. It was that listing that really kick-started Sports Directs’ exponential growth. 2 years later in 2009, Sports Direct established market leadership after their sales exceeded £1.0bn (Sports Direct, no date given). This information presents Mike Ashley as an entrepreneurial genius,
Allen,N.J. and Meyer, J.P. (1990) `The measurement and antecedents of affective, continuance and normative commitment to the organization' Journal of occupational Psychology in L. Fulop and S. Linstead, Management: A Critical Text, Macmillan, South Yarra, 1999, pp 259
“Equity considerations play a major role not only in the evolution of distributive systems but all in the emergence of supporting ideologies and the processes through which distributive systems are challenged and replaced” (Cook,K.S., & Parcel, T.L. 1997, p.2). Therefore, when the employees are rewarded for their work they will most likely work harder to restore the balance of equity. Whereas if an employee is under rewarded the employee will most likely do the opposite and not work as hard. The ongoing issue at Engstrom Auto Mirror Plant was that the employees were being under- rewarded and not appreciated by upper management, which lead to low productivity that severely impacted the companies
The creation of a strong working psychological contract is dependant on the commitment and effectiveness of the employee within in the organisation. The extent to which their own expectations of what the organization will provide for them and what they owe the organisation in return must match the organisation’s expectations of what it will give and get in return (Schein, 1965).
Perot Systems had long had a strict command-and-control philosophy that extended to its customers. Driven by the strong pay-for-performance compensation system, Perot Systems employees were looking at short-...
Duboff, R. (1999). Loyal Employees Are a Key Link to a Firm's Value. Journal of Management in Engineering, 9.
Smissen, S.; Schalk, R.; Freese, C. (2013) Organizational change and the psychological contract – How change influences the perceived fulfillment of obligations, Journal of Organizational Change Management, 26(6), 1071-1090
Compare the difference between job satisfaction and organizational commitment. Determine which is more strongly related to performance for your selected company.
Additionally, employee satisfaction are directly correlated to employee commitment and the loyalty which again directly related with the business and work productivity (Papazisi, Raidén, and Sheehan, 1995). Smart leaders knows that keeping their employee satisfied and motivated are essential for their organization (Sher, Bakhtiar, Muhammad &Ali, 2010).