The Development of Employee Financial Participation in Europe

Financial participation is a key human resource management practice, extending democracy at the workplace and, as the success of the organization becomes directly linked to employee rewards, altering the relationship between employees and the organization. In this chapter we discuss the incidence and characteristics of financial participation in eight European Union countries. We address the following questions in the chapter. One, what is the incidence of financial participation schemes in these eight Member States? Two, to what extent are financial participation schemes selective for specific employee groups, such as managers? Three, what was the extent of development of these schemes in the decade 1995–2005? Four, what are the determinants of the use of these schemes? In the chapter we focus on narrow-based schemes targeted at management and broad-based schemes where all employees are eligible to participate. We focus on two types of schemes through which employees and managers participate financially in the performance of their companies: profit sharing and share ownership.