Profit sharing, employment + motivation
Profit sharing schemes may improve employees loyalty to the company. These schemes can help to break down the ‘them and us’ attitude. Under profit sharing schemes, a greater level of profit regarded as being of benefit to all employees, and not just senior managers and shareholders. Employees may be more willing to accept changed designed to improve the businesses profitability. The danger with profit-sharing schemes is that they can be too small and fail to provide employees with a worthwhile payment. On the other hand, if schemes are too generous, the company may have insufficient funds for capital investment.
Share ownership
This can be a development of profit-sharing schemes. Some businesses pau their employees share of the profits in the form of company shares. Share ownership schemes vary enormously in their operation. We shall consider two of the main schemes operated by
Some businesses such as Asda offer employees the opportunity to purchase shares after saving for a period of time. After say, 5 years, employees can purchase shares at the price they were at the start of the saving scheme. This is a popular type of scheme, though tax changes introduced in the chancellor’s 1999 budget will make it more difficult to operate in the future.
Share options are a form of share ownership normally aimed at senior managers. About 14% of
Under share options, managers have the opportunity to buy company shares at some agreed date in the future, but at the current share price. This, the current share price might be £2.50 and the manager is given the option to purchase 1000 shares in 3 years’ time at this price. In 3 years the market price of shares may have risen to £3.50. This offers the manager the chance to purchase the 1000 shares for £2500 (£2.50 x 1000) and to sell them immediately for £3500, giving a profit of £1000. If the share price falls over the 3-year period the manager will choose not to buy the shares.
Job enrichment
Job enrichment occurs when employee’s jobs are redesigned to provide them with more challenging and complex tasks. This price also called vertical loading is designed to use all employees’ abilities. The intention is to enrich the employee’s experience of work.
Frederick Hertzberg was a strong supporter of job enrichment. He believed that enrichment provided employees with motivators that increase the satisfaction they might get from working. Job enrichment normally involves a number of elements:
- Redesigning jobs so as to increase not just the range of tasks, but the complexity of them
- Giving employees greater responsibility for managing themselves
- Offering employees the authority to identify and solve problems relating to their work
- Providing employees with the training and skills essential to allow them to carry out their enriched jobs effectively.
Job enrichment involves a high degree of skill on the par of these managers overseeing it. They must ensure that they do not ask employees to carry out duties of which they are not capable.
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