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Does Employee Ignorance Undermine Shared Capitalism?

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  • John W. Budd

Abstract

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.

Suggested Citation

  • John W. Budd, 2008. "Does Employee Ignorance Undermine Shared Capitalism?," NBER Working Papers 14236, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:14236
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    References listed on IDEAS

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    1. John W. Budd & Karen Mumford, 2004. "Trade Unions and Family-Friendly Policies in Britain," ILR Review, Cornell University, ILR School, vol. 57(2), pages 204-222, January.
    2. Budd, John W. & Mumford, Karen A., 2005. "Family-Friendly Work Practices in Britain: Availability and Perceived Accessibility," IZA Discussion Papers 1662, Institute of Labor Economics (IZA).
    3. Sewin Chan & Ann Huff Stevens, 2008. "What You Don't Know Can't Help You: Pension Knowledge and Retirement Decision-Making," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 253-266, May.
    4. John W. Budd & Brian P. McCall, 1997. "The Effect of Unions on the Receipt of Unemployment Insurance Benefits," ILR Review, Cornell University, ILR School, vol. 50(3), pages 478-492, April.
    5. Richard B. Freeman, 2001. "The Shared Capitalist Model of Work and Compensation," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(1), pages 169-181.
    6. Richard B. Freeman & Joni Hersch & Lawrence Mishel, 2004. "Emerging Labor Market Institutions for the Twenty-First Century," NBER Books, National Bureau of Economic Research, Inc, number free04-1, July.
    7. Martin Conyon & Richard B. Freeman, 2004. "Shared Modes of Compensation and Firm Performance U.K. Evidence," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980–2000, pages 109-146, National Bureau of Economic Research, Inc.
    8. David Card & Richard Blundell & Richard B. Freeman, 2004. "Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980–2000," NBER Books, National Bureau of Economic Research, Inc, number card04-1, July.
    9. Mitchell, Olivia S, 1988. "Worker Knowledge of Pension Provisions," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 21-39, January.
    10. James T. Bennett & Bruce E. Kaufman, 2004. "What Do Unions Do?: A Twenty-Year Perspective," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 339-350, July.
    11. McCall, Brian P, 1995. "The Impact of Unemployment Insurance Benefit Levels on Recipiency," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 189-198, April.
    12. John W. Budd, 2004. "Non-Wage Forms of Compensation," Journal of Labor Research, Transaction Publishers, vol. 25(4), pages 597-622, October.
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    Cited by:

    1. Alex Bryson & Richard B. Freeman, 2010. "To join or not to join? Factors influencing employee share plan membership in a multinational corporation," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: Advances in the Economic Analysis of Participatory & Labor-Managed Firms, pages 1-22, Emerald Group Publishing Limited.
    2. Uwe Jirjahn, 2018. "The adoption and termination of profit sharing for employees: does management’s attitude play a role?," Applied Economics, Taylor & Francis Journals, vol. 50(2), pages 108-127, January.
    3. Douglas Kruse & Joseph Blasi & Dan Weltmann & Saehee Kang & Jung Ook Kim & William Castellano, 2022. "Do Employee Share Owners Face Too Much Financial Risk?," ILR Review, Cornell University, ILR School, vol. 75(3), pages 716-740, May.
    4. Kruse, Douglas L. & Blasi, Joseph & Weltmann, Dan & Kang, Saehee & Kim, Jung Ook & Castellano, William, 2019. "Do Employee Share Owners Face Too Much Financial Risk?," IZA Discussion Papers 12303, Institute of Labor Economics (IZA).
    5. Douglas L. Kruse & Joseph R. Blasi & Rhokeun Park, 2010. "Shared Capitalism in the U.S. Economy: Prevalence, Characteristics, and Employee Views of Financial Participation in Enterprises," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 41-75, National Bureau of Economic Research, Inc.
    6. Uwe Jirjahn, 2016. "Works Councils and Employer Attitudes toward the Incentive Effects of HRM Practices," Research Papers in Economics 2016-07, University of Trier, Department of Economics.

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    More about this item

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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