Employee Ownership Through the Implementation of Employee Stock Ownership Plans and Corporate Cultures that Emphasize Employee Participation

Abstract

Employee ownership programs are growing as an important facet of corporate finance. The ability to control ownership on both the public and private levels, prevent takeover and external ownership bids, increase employee motivation and participation, and to gain tax breaks are all possible reasons to design an employee stock purchase program. The number of companies using either direct stock purchase plans, stock options, the 401 (k) and the ESOP has grown over the past 30 years because of government support and corporate acceptance. The rise in the use of the programs has led to increased employee involvement in their companies. The extent of this involvement is directly related to the design of the program and the culture of the company that implements the program. A culture is pro-employee ownership when the communication between management and the regular employee is constant and open. The more management allows employees to participate in every-day decisions, the greater the success of the employee ownership plan in terms of increased participation and employee motivation. Employee ownership programs have grown dramatically in number, participation level, and amount of money held in the last few years and that growth should continue in the next decade. To provide an example of how an employee ownership plan and a corporate culture interact, a case study will be presented of the Ann Arbor based Zingerman's Community of Businesses. The group of companies' culture is very unique because the management is set on building an employee group that strives for entrepreneurship and self-growth. The case study will demonstrate a correlation between the type of employee ownership plan, the implementation goal of the plan, and the corporate culture.