Can employee share‐ownership improve employee attitudes and behaviour?

Abstract

Purpose

The purpose of this article is to examine the outcomes of a substantial broad‐based employee share‐ownership scheme for employee attitudes and behaviour in a privatised firm.

Design/methodology/approach

Results are based on a survey of 711 employees in Eircom, an Irish telecommunications firm, which is 35 percent employee‐owned.

Findings

The ESOP has created sizable financial returns and has had extensive influence in firm governance at the strategic level. However, findings show only a limited impact on employee attitudes and behaviour. This is attributed to a failure in creating a sense of employee participation and line of sight between employee performance and reward.

Practical implications

The aim of employee share‐ownership often includes aligning employee objectives with those of other shareholders, and thus improving labour performance. The findings in this study highlight a need to provide employees with a sense of ownership and control. Findings also question the assumption that where employees have a substantial shareholding, they will focus on securing the long‐term prospects of the firm.

Originality/value

Little research has examined the impact of a large employee shareholding on attitudes and behaviour within a public‐quoted firm. The substantial and unparalleled size of the Eircom ESOP presented a unique opportunity to conduct such a study.

Citation

McCarthy, D., Reeves, E. and Turner, T. (2010), "Can employee share‐ownership improve employee attitudes and behaviour?", Employee Relations, Vol. 32 No. 4, pp. 382-395. https://doi.org/10.1108/01425451011051604