Book contents
- Frontmatter
- Contents
- List of figures and tables
- Foreword by John Egan
- Acknowledgements
- Introduction: Setting the scene
- Part 1 The fundamentals
- Part 2 Performance management in action
- Part 3 Base pay and benefits
- Part 4 Rewarding employee performance
- 14 Overview of performance-related rewards
- 15 Merit pay for individual performance
- 16 Recognition awards
- 17 Results-based individual incentives
- 18 Collective short-term incentives
- 19 Collective long-term incentives
- 20 Executive incentives
- Case study. Beyond the hard sell: Performance incentives at Southbank
- Part 5 Fitting it all together
- Model responses to case studies
- References
- Index
19 - Collective long-term incentives
from Part 4 - Rewarding employee performance
- Frontmatter
- Contents
- List of figures and tables
- Foreword by John Egan
- Acknowledgements
- Introduction: Setting the scene
- Part 1 The fundamentals
- Part 2 Performance management in action
- Part 3 Base pay and benefits
- Part 4 Rewarding employee performance
- 14 Overview of performance-related rewards
- 15 Merit pay for individual performance
- 16 Recognition awards
- 17 Results-based individual incentives
- 18 Collective short-term incentives
- 19 Collective long-term incentives
- 20 Executive incentives
- Case study. Beyond the hard sell: Performance incentives at Southbank
- Part 5 Fitting it all together
- Model responses to case studies
- References
- Index
Summary
In this chapter, we examine collective long-term incentives in the form of broadly based employee share plans. Employees may acquire equity in their company by two distinct means: either by being granted shares in lieu of a cash bonus, or by purchasing the shares over time using their own funds or funds provided by the company itself. Although there has been considerable innovation in equity plans for salaried executives in recent years (discussed further in chapter 20), plans for other employees generally fall into one of three main plan types: (1) share grants, (2) share purchase plans and (3) share option plans.
We begin with an overview of the general nature and extent of employee share ownership in developed countries. Next we consider the potential and possible pitfalls of equity-based rewards in general and major theoretical perspectives on how share plans might influence employee attitudes and behaviour. We then turn our attention to the nature and incidence of each of the three main share plan types, as well as considering the strengths and weaknesses of each. Finally, we consider the best fit options for employee share plans.
Overview of employee share ownership
An employee share plan is any type of plan that allows some or all employees to acquire shares in the organisation that employs them. Such plans have a number of key features in common. First, rewards accrue in the form of share dividends and share price appreciation rather than in the form of a direct cash payment.
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- Managing Employee Performance and RewardConcepts, Practices, Strategies, pp. 447 - 466Publisher: Cambridge University PressPrint publication year: 2007