Worker-Ownd Firms

[Dan Clore]

News & Views for Anarchists & Activists:
http://groups.yahoo.com/group/smygo

[Hmm, if you re-label it "shared capitalism" (gag!), socialism (worker
ownership of the means of production) suddenly becomes acceptable at
National Review.--DC]

http://www.nationalreview.com/agenda/335217/worker-owned-firms-reihan-salam
Worker-Owned Firms
By Reihan Salam
December 10, 2012 10:28 A.M.

Recently, Moira Herbst wrote a short article in The Guardian extolling
the virtues of worker-owned firms in the U.S. She framed the spread of
employee ownership as a vehicle of social justice, but I was somewhat
more interested in the possibility that employee ownership might
mitigate extractive behavior on the part of workers and managers,
including shirking. In an essay in Shared Capitalism at Work, a
collection that takes a broadly positive view of worker-owned firms,
Richard Freeman, Douglas Kruse, and Joseph Blasi explore the impact of
group incentive systems on free-riding behavior. The following are
observations drawn from the paper:

1. Most workers believe that they can readily detect shirking by
fellow employees.

2. Workers are most likely to take action against shirkers in
workplaces where employees are paid by some form of “shared
capitalism”—by which we mean profit sharing, gain sharing, stock
options, or other forms of ownership—and they participate in decisions
or work in team settings.

3. Responses to these forms of group incentive pay are largest when
they trust management and have good employee management relations, and
when the fi rm adopts high- performance human resource policies, low
levels of supervision, and pays fi xed wages at or above market levels
along with the incentive pay.

4. Consistent with the theory of free riding, anti- shirking
behavior is greater in smaller fi rms and is particularly strong in small
fi rms with shared capitalist pay.

5. Workers in workplaces where there is more anti- shirking
behavior report that co- workers work harder and encourage other workers
more, and that their workplace facility.

In another essay, on the role of employee ownership on workplace
performance, Freeman, Kruse, and Blasi, joined by Christopher Mackin,
report that shared capitalism has a positive impact across many dimensions:

Shared capitalism is linked to lower turnover and greater loyalty
and willingness to work hard, particularly when combined with high-
performance policies, low levels of supervision, and fi xed pay at or
above market levels. Workplaces where workers average more shared
capitalist compensation report greater employee effort along several
dimensions. The only outcome with which shared capitalist compensation
is adversely related is absenteeism, but this result largely disappears
when controlling for interactions with high performance policies and
closeness of supervision.

Looking at particular programs, the strongest effects of shared
capitalism are for profit sharing and employee ownership. The largely
positive results are corroborated by worker views: most workers report
that cash incentives, stock options, ESOP stock, and ESPP participation
motivate them to work harder. The less risky forms of shared capitalist
programs—profit sharing, gain sharing, stock options, and ESOPs—have
greater effects than the riskier programs in line with concerns about
workers being averse to risking their own capital.

The authors acknowledge, however, “corporate culture” as a latent
variable might be doing much of the work in improving workplace
outcomes. The question is whether or not shared capitalism is likely to
encourage the use of high performance policies.

One of the issues I’m eager to explore further is whether or not shared
capitalism makes it more likely that employees will embrace
organizational discipline. That is, if the business cycle goes south or
if the larger competitive environment changes and the firm has to reduce
costs, are employees in shared capitalist firms more likely to make
concessions than they might be under a different ownership structure?



--
Dan Clore

New book: _Weird Words: A Lovecraftian Lexicon_:
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"From the point of view of the defense of our society,
there only exists one danger -- that workers succeed in
speaking to each other about their condition and their
aspirations _without intermediaries_."
--Censor (Gianfranco Sanguinetti), _The Real Report on
the Last Chance to Save Capitalism in Italy_