It’s pretty likely that everyone reading this has some connection with an employee share plan. Maybe you run one, quite probably you’re in one.

What is sometimes difficult to quantify is ‘why a share plan at all?’

Our gut feeling tells us that companies should offer share plans because they will increase the loyalty, retention and work rate of staff. The same tells us that employees should participate in a plan because shares are a proven long-term investment, they help staff identify with shareholders and make them more determined to contribute to the company’s success. Companies are under increasing pressure to demonstrate a return on investment for share plans, but market data is poor and empirical evidence to support this gut feeling is very hard to come by. 

With this challenge in mind Computershare commissioned a research project, via the London School of Economics (LSE), into its own employee share plans. Professor Richard Freeman (Senior Research Fellow - Wellbeing, Labour Markets, Harvard University) and Alex Bryson (Visiting Research Fellow - Labour Markets, the LSE) are internationally renowned for their work on ‘shared capitalism’ having undertaken major research projects in the US and UK. They are fascinated by the effect that ‘ownership’ has on the company and the employee, and jumped at the chance to ask myriad questions of the Computershare workforce.

Employees in the UK, Ireland, South Africa, Australia and the United States were asked the same set of questions regarding their attitude to share ownership, their employer, general investment, plan design and the effects of the share plan. The survey went to all employees, not just the 60% in the company share plan, in order to be able to assess the thoughts and impressions of both participants and non-participants.

In total, 3207 employees responded to the survey, spread across all countries, giving a rich vein of data for the social scientists to analyse.

Headline results tell us our gut feelings on why companies should run share plans and why employees should participate in them are correct:

>    Members are more likely to ‘go the extra mile’ every day

>    The bigger the plan contribution, the bigger the effect

>    Colleague case studies and anecdotes are far more likely to make people join a plan than standard HR benefit messages

>    Many members belong even though they don’t understand the mechanisms of the plan

>    The main reason for not joining is affordability

>    Members are more likely than non-members to rate their work effort higher than average - see below graph.

It must be noted that although the difference is not large it is statistically significant when based on 3207 respondants*

The research gives us a great insight into the factors affecting plan uptake as well as the changes that employers can potentially make in plan communication and design to achieve corporate objectives. It also tells us the value that employees place in their employee share holdings.

* The LSE have given this statistic a 99% confidence level.