Chapter

Shared Modes of Compensation and Firm Performance: U.K. Evidence

Edited by Martin J. Conyon and Richard B. Freeman

in Seeking a Premier Economy

Published by University of Chicago Press

Published in print July 2004 | ISBN: 9780226092843
Published online February 2013 | e-ISBN: 9780226092904 | DOI: http://dx.doi.org/10.7208/chicago/9780226092904.003.0004
Shared Modes of Compensation and Firm Performance: U.K. Evidence

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For more than two decades, the United Kingdom has tried to encourage shared capitalist practices by offering tax advantages to firms that link pay to profits, provide company shares to workers, encourage workers to save through stock options, or develop approved share-option plans. Behind the desire to increase shared compensation in the United Kingdom is the widespread belief that shared capitalist arrangements will create a better work culture with improved productivity and commitment by employees. Existing studies on profit sharing, employee ownership, and employee participation lend general support to this proposition, but these studies also show considerable variability in the effects of practices on firm performance. This chapter examines how a shared mode of compensation has affected firm performance in the United Kingdom. It uses a 1999 survey of the shared compensation strategies used by a sample of UK listed companies between 1995 and 1998; the 1998 Workplace Employment Relations Survey (WERS) of some 2,000 UK establishments or workplaces; and the 1990–1998 longitudinal WERS panel survey of nearly 900 workplaces.

Keywords: United Kingdom; shared compensation; firm performance; Workplace Employment Relations Survey; profit sharing; employee ownership; employee participation; stock options; productivity

Chapter.  14332 words.  Illustrated.

Subjects: International Economics

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