Does employee ignorance undermine shared capitalism?
National Bureau of Economic Research, 2008 - Business & Economics - 41 pages
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.
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200 employees Accurate Yes arc covered arc significantly Bounded Rationality Budd Bureau of Economic Capitalism data set column companies report company indicated company with 200 D-Day dependent variable indicates disagree econometric Economic Research eligibility Employee believes employee responses ESOPs estimate false positive Freeman gainsharing plans hard and loyalty High school dropout higher paid Ignorance Rates imperfect individual-based performance pay individual-level Industrial and Labor Last year's total marginal effect match measuring employee National Bureau NBER Shared Capitalism non-sales non-white nonunion Number of children omitted category overall paper Partial Subscription participate pension Perceived Coverage percent of employees perfect information performance pay plans performance-based pay plan performance-related pay policies predicted Probit Analyses probit model probit results profit-sharing plan publicly-provided benefits Sales occupation sample Shared Capitalism data shared capitalism plans shared capitalism programs significant standard deviation standard error stock options surveys Tablc Table undermine shared capitalism variables arc various shared capitalism workplace