StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

The Effectiveness of Employee Stock Ownership Plans - Essay Example

Comments (0) Cite this document
Summary
An employee stock ownership plan (ESOP) refers to the method that allows a company’s employees participating in ownership of the company’s assets (Gimein). Companies provide these opportunities for their workforce without any additional costs for employees. Shares are…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.5% of users find it useful
The Effectiveness of Employee Stock Ownership Plans
Read TextPreview

Extract of sample "The Effectiveness of Employee Stock Ownership Plans"

Download file to see previous pages Employees do not have to pay taxes on the contributions when they work in a company. Only when they leave their job, they have to make all payments. It means that employees have a strong motivation to increase their productivity and generate higher revenues for the company in general not only because it increases their personal wage but also because they are the co-owners of the company. Thus, the effect on employees’ motivation is highly positive.
Another important aspect is that employees are interested in the successful implementation of job functions of their colleagues while in the absence of this plan, they are primarily neutral. If other employees work more efficiently, it will lead to a higher gross output, and the market value of the company will increase. Consequently, the given employee may receive higher revenues even if his/her personal productivity has not increased. Thus, it may be expected that the corporate culture within such organizations will be better than in other companies. ESOP encourages the development of non-material assets in the company.
However, ESOP also has some disadvantages for employees. I particular, it concentrates all employees’ shares in one company. It leads to over-concentration of risks that is generally considered as being highly negative. Therefore, employees tend to become too dependent over the dynamics of market prices of the company. In some situations, this dynamics does not correspond to their productivity. For example, during economic recessions, stock prices usually fall dramatically that may decrease the revenues of employees even if their productivity keeps rising.
Another problematic aspect is that ESOP does not always result in a higher productivity of employees. It means that motivation alone is not sufficient for higher output and better overall economic results. Moreover, some employees may hope to receive a higher remuneration in an ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Effectiveness of Employee Stock Ownership Plans Essay”, n.d.)
The Effectiveness of Employee Stock Ownership Plans Essay. Retrieved from https://studentshare.org/management/1652650-the-effectiveness-of-employee-stock-ownership-plans
(The Effectiveness of Employee Stock Ownership Plans Essay)
The Effectiveness of Employee Stock Ownership Plans Essay. https://studentshare.org/management/1652650-the-effectiveness-of-employee-stock-ownership-plans.
“The Effectiveness of Employee Stock Ownership Plans Essay”, n.d. https://studentshare.org/management/1652650-the-effectiveness-of-employee-stock-ownership-plans.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The Effectiveness of Employee Stock Ownership Plans

Incentive Effects Of Stock Purchase Plans

...? Article Incentive effects of stock purchase plans: This article was written by Sanjai Bhagat. Financial economists are interested in various compensation plans. They are mostly keen to know if there are any alternate compensation plans available for tax, incentive and signaling reasons. Most compensation plans have tax implications which makes it difficult to figure out and evaluate the overall effects of using these plans. This was a comprehensive research on the stock market reach reaction to various employee stock purchase plans. The...
4 Pages(1000 words)Case Study

Employee Involvement and Employee Participation

...of employee participation, related mostly to specific economic benefits and not to the participation of employees in the decision making process of the organization. Moreover, it is noted that through employee ownership, a common shared capitalism practice, the employee satisfaction and employee performance can highly increased, leading to the assumption that shared capitalism is a quite effective mode of employee involvement. The development of different schemes for enhancing employee performance can be explained by taking into consideration the role of employees in the...
3 Pages(750 words)Essay

Employee Ownership and Effect on Attitude

...? Employee Ownership and Effect On Attitude This paper seeks to evaluate the effects of employee share ownership on the attitude of employees. The employee ownership initiative in the U.S. was developed in 1974 as part of a pension plan (Kruse, 2002). According to Keef (1998), employee ownership has been a subject of major concern for most firm owners. In this respect, the main point of interest has been the impending improved performance accrued to employee share ownership. This is through the underlying...
6 Pages(1500 words)Essay

Project Management The effectiveness of the plans

...is the inability to show the interdependencies between event s and activities, which is overcome in the network analysis. The foremost advantage of PERT is that it requires planning in detail to create a network of activities. Network development and critical path analysis reveal interdependencies and problem areas that are not very clear if other methods are used. The technique lays its focus on determining where the greatest effort should be made for a project to stay on schedule. The next greatest advantage of network analysis is that the business manager can know about the probability of meeting specified deadlines by development of alternative plans. Another advantage of this analysis is that we...
8 Pages(2000 words)Essay

Employee Stock Ownership Plans (ESOP)

...EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) Introduction An Employee benefit plan protects employees and their families from economic hardship brought aboutby sickness, disability, death, or unemployment; it provides retirement income to employees and their families; and it provides a system of leave or time off from work. Broadly defined, a benefit plan can include other components such as bonuses, service awards, reimbursement of employee educational expenses, and other benefits appropriate to employee responsibility (Employee Benefits). An...
4 Pages(1000 words)Essay

Effectiveness of Coaching for Fixed Term Employee

...predominately works, and that not one organization, throughout the entire duration of the study, found that coaching is an inadequate method of systematic teaching and learning. This section is particularly important to the overall impact of the report in that it states the fact that the most common issues in coaching are regarded as being relative to individual performance. Research conducted throughout this section also proposes that coaching is more than effective, and that organizations can use this method to train individuals and address a variety of methodological issues within their managerial structure. Reference is also made throughout this section with regards to the Marks and Spencer coaching guide, which...
4 Pages(1000 words)Book Report/Review

The Stock Plans

...Stock PlansStock options plan is one of the widely used forms of compensation in the United States. Stock options plan significantly affects a company and its shareholders. The issuance of shares to compensate the company’s employees increases the number of total shares outstanding, hence diluting the worth of every single shared owned by shareholders. However, apart from that, stock option plan minimizes a company’s compensation expenses, saves its cash reserves (Accounting For Employee Stock Options, 2004) give the employees a...
6 Pages(1500 words)Essay

Methods Of Employee Evaluation And Their Effectiveness

...Methods Of Employee Evaluation And Their Effectiveness Introduction The purpose of this interview was to determine how the supervisors handled a new employee on their first day at work. It also sought to know how the supervisors handle their daily work plan and the steps they take when their plans are not realized. In the interview, I wanted to know their methods of employee evaluation, both formal and informal and lastly what was their take on being a supervisor in the 21th century. The first supervisor I interviewed was Erick Smith who is my supervisor at uptown cleaning company that I work part time. The second supervisor was Pete...
2 Pages(500 words)Case Study

Assignment 4: Recognizing Employee Contributions

...benefits are also known as workers’ rights which are referred as a set of certain human rights pertaining to labor relations between employer and employees. Presently, all these rights are considerer under the purview of labor and employment law. The basic benefits of employment law are basic fixed pay for workers, fringe benefits, well-defined work hours and appropriate working conditions. In different countries, the law has been modified as per requirement but the core legal benefits can be extended to paid holidays, sick leave, medical insurance, life insurance, cafeteria, retirement plans, stock option, severance packages, health and wellness programs, work-life balancing activities,...
6 Pages(1500 words)Assignment

Employee Benefits-Medical Plans and Health Care

...family coverage and penalties for workers who fail to join wellness programs. The Affordable Care Act has influenced the new trends in cost sharing. More workers are required by the law to enroll to health care plans, failure to which they are prone to payment of penalties. As a result, wellness programs have increased in popularity as employers are obliged by law to offer incentives for workers’ participation in wellness programs or impose penalties for failure to join wellness programs. This is likely to push the cost of coverage from 20% to 30%. While many employees and workers blame the Affordable Care Act for raising the cost of medical care, experts hold that the act has had a catalytic...
6 Pages(1500 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic The Effectiveness of Employee Stock Ownership Plans for FREE!

Contact Us