Wednesday, June 22, 2016
You work hard for your paycheck, but do you really care if your employer’s business is successful? Would you care a little bit more if you owned a piece of the company?
That’s what Sanghee Park, an assistant professor in the Rutgers School of Management and Labor Relations (SMLR), aims to discover as she begins a research fellowship exploring the psychological impact of Employee Stock Ownership Plans (ESOP).
“As a compensation researcher, I realized that it is crucial to investigate the impacts of ESOPs on those employee attitudes and behaviors that are closely linked to organizational effectiveness,” Park said. “That will lead to a better understanding of the mechanisms that facilitate employee ownership.”
Park is among 30 new research fellows appointed by SMLR through a national competition to study how broad-based employee ownership and profit sharing are shaping the success of companies and the future of American business. The researchers, who represent more than a dozen colleges and universities across the country, will be formally introduced at the annual Beyster Symposium in La Jolla, Calif. from June 26 – 28.
J. Robert Beyster and Mary Ann Beyster established the fellowship program and an endowed professorship in 2008 with a $2 million gift. It has grown to become one of the largest fellowship programs at Rutgers University, with annual assets of about $400,000. Major contributors include the Beyster family’s Foundation for Enterprise Development, the Employee Ownership Foundation (creator of Park’s Louis O. Kelso Fellowship), and other non-profits and individuals.
The fellowship program’s goal is to inform scholarship and public policy on an issue that affects millions of American workers.
“In a time when wages have been flat for decades and most of the income is flowing to those who own capital or have a share of capital, broad-based employee ownership, profit sharing, and gain sharing provide one approach to increasing the wages and wealth of the middle class,” said sociologist Joseph R. Blasi, the J. Robert Beyster distinguished professor at SMLR and director of the fellowship program.
About 20 percent of American workers own a share in their employer’s business, about seven percent hold employee stock options, one-third have some form of profit-sharing, and one-fourth have some form of gain-sharing, according to a recent Rutgers analysis of the national 2014 General Social Survey of employed adults.
Google, Intel, Southwest Airlines, and Starbucks are among the high-profile employers that share the wealth with their workers. Chobani joined the ranks in April, when CEO Hamdi Ulukaya announced he would grant 10 percent of the company’s ownership to its 2,000 full-time employees. The move made national news.
"There is growing interest in employee ownership and other methods for workers to directly share in economic rewards, both in the U.S. and internationally,” said economist Douglas L. Kruse, a distinguished professor at SMLR and associate director of the fellowship program. “We're excited to match this interest with a growing number of top-notch scholars and policy experts from around the country through the Rutgers fellowship program.”
Mentored by Blasi, Kruse, Harvard Professor Richard Freeman, and other senior scholars, the fellows have produced groundbreaking research over the last eight years. The program now includes more than 120 fellows and faculty mentors nationwide.
J. Robert Beyster Fellow Paige Ouimet, a finance professor at the University of North Carolina at Chapel Hill, conducted empirical research that showed modest ESOPs in stock market companies tend to increase productivity and benefit shareholders and workers.
The empirical research of Louis O. Kelso Fellow Erik Olsen, an economist from the University of Missouri at Kansas City, demonstrated that part of the productivity increase that comes with employee ownership can be explained by lower levels of supervision.
Sanghee Park will soon add her research to the growing list. She studied psychology in her native South Korea before earning a master’s degree and Ph.D in human resources management from Cornell University. By exploring the psychological impact of ESOPs, she is combining both areas of expertise in a single research project.
Park will conduct detailed surveys at ESOP companies across the country to gain a deeper understanding of what the employees and firms are experiencing. What she uncovers could ultimately pave the way for even more companies to offer capital shares to their workers.
“This is a very attractive and ideal compensation plan that can lead to the success of both a company and its employees, if it’s implemented in the right way,” Park said. “My research will offer guidance on how to do it successfully.”