Does Employee Ignorance Undermine Shared Capitalism?
The potential of shared capitalism to improve individual and organizational performance through financial incentives depends on employees knowing about and participating in compensation plans that link rewards to performance. This paper therefore analyzes a survey of employees from multiple companies to assess the extent to which employees are ignorant about company, group, and individual-based incentive pay plans and ESOPs. The findings reveal significant amounts of employee ignorance in both under- and overstating the extent to which such plans apply to them individually.
I am grateful to Richard Freeman, Doug Kruse, and Joseph Blasi for giving me the opportunity to write this paper, to Doug for his help with the data, and to Doug, Joseph, Brigitte Madrian, and seminar participants at the University of Minnesota and Iowa State University for helpful comments. An earlier version of this paper was presented at the NBER Shared Capitalism Research Conference in October 2006. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Does Employee Ignorance Undermine Shared Capitalism?, John W. Budd. in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options , Kruse, Freeman, and Blasi. 2010