The Co-operative Model of Enterprise

Although Employee Share Ownership Plans (ESOPs) are widely used in Australian companies, little is known about why employees participate in these plans. Yet understanding employee motivations for share ownership has significant implications for corporate governance, human resource practice and public policy. We first review the history of ESOP regulation in Australia in order to identify Federal Government policy rationales for ESOPs. We then identify employee motives for participating inemployee share plans. Two hypotheses, using data from both employee shareholders and non shareholders in Australia are investigated: that employees participate because they are motivated by financial considerations or they participate because they believe share ownership is a way of increasing their involvement in decision-making at work. We then compare employee motivations for participating in ESOPs with the policy rationales advanced by the government for its support of ESOPs. We find, based on this comparison, that there is a mismatch between the employee motivations and the government’s policy rationales and we identify the implications of this finding for public policy.