ESOP's Fables: a tale of a machine tool company

Abstract

Employee Share Ownership Plans (ESOPs) have attracted considerable attention in the UK in recent years and have been seen by some writers as a potentially more advanced form of share ownership. Benefits are said to include improved economic performance and new channels for participation in management decision making. However existing evidence is by no means conclusive. The evidence is largely American and the research findings may not be directly transferable because of legal and historical differences. Moreover, much of the work is based on surveys which tend to abstract the findings from the organizational context. In this paper we argue that ESOPs should be seen in the context of the broader employee relations setting. In particular, we argue that the ESOP in our case study formed the second of three waves of Employee Involvement and its performance can only really be understood in this context. Moreover, despite its attractiveness in principle, the ESOP proved no more successful than any other El scheme in transforming the attitudes of employees.