About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

101 Monthly Lab. Rev. 23 (1978)
Employee-Owned Companies: Is the Difference Measurable

handle is hein.journals/month101 and id is 643 raw text is: Employee-owned companies: is the difference measurable? Employee ownership may be associated with better attitudes toward the job and higher productivity and profits, according to a recent 98-firm survey MICHAEL CONTE AND ARNOLD S. TANNENBAUM Employee ownership can be found throughout the history of the United States, although companies that are wholly owned by employees (including workers) have always been rare. One survey reported that 389 companies, in which a large proportion of the stock was directly owned by employees, were established in the United States between 1791 and 1940. The number of compa- nies with at least some degree of employee ownership was probably much larger, and there is evidence that this number has grown in recent 2 years. Several aspects of performance in a variety of employee-owned companies are analyzed in this article.3 The data employed include: the size and sales volume of employee-owned companies; the percent of employees who participate in the ownership plan; the percent of equity owned by nonmanagerial as well as managerial persons; and aspects of control of the company by employees. Also analyzed are the attitudes of managers toward the ownership plan and their judgment about the effect of the plan on productivity and profit. Actual profit data were available for a subset of companies, and the relationship between profit and other characteristics of these companies was studied. Michael Conte is assistant study director and Arnold S. Tannenbaum is program director, Survey Research Center, Institute for Social Research, The University of Michigan. Employee ownership can take two forms: direct, where employees own shares in the company as would ordinary shareholders in a joint-stock company; or beneficial, where employees own shares through a trust, as illustrated by the Employee Stock Ownership Trust (ESOT).4 The Employee Retirement and Income Security Act of 1975 stipulates that the holdings of an Ownership Trust must be invested primarily in the stock of its company-unlike the holdings of the usual profit-sharing trust, which may be diversified, or of a pension trust, which must be diversified. Contributions to the Trust are governed by an Employee Stock Ownership Plan (ESOP). Depend- ing on the plan, contributions may be made on the basis of a profit-sharing principle (whereby some fixed percentage of company profits is annually transferred to the Trust), a cost principle (whereby a fixed percentage of labor costs is annually transferred to the Trust), a fixed contribution principle (whereby a fixed dollar amount is transferred to the Trust), or by other methods determined entirely at the discretion of a single party or parties. The central requirements, how- ever, are that the Ownership Trust invest primari- ly in employer securities and that disbursements from the Trust be made in employer securities. Dividends that may be declared are not usually distributed immediately to employees but, rather, are held in trust. Nonetheless, the financial well- being of the beneficiaries of stock in the Trust is tied to the success of the company.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most