7. Profit‐sharing and Share Ownership Schemes in Britain

Publication Date01 May 1986
AuthorMichael Poole
SubjectHR & organizational behaviour
7. Profit-sharing and Share
Ownership Schemes
in Britain*
by Michael Poole
Few commentators would have forecast the upsurge of interest in employee share-
holding and profit-sharing in Britain in the 1980s. The 1978 Finance Act reached the
statute book with far less publicity that the abortive Bullock Committee proposals of the
And the subsequent reinforcement of these provisions by the 1980 Act
seemed unlikely to be particularly consequential. In the event, however, the tax
advantages for firms adopting Inland Revenue approved schemes for employee financial
participation proved to be a major stimulus and, indeed, the mid-1980s support by all
major political parties for these programmes has no obvious historical parallel.
The Department of Employment Study
But partly because of the surprisingly rapid nature of this advance, research on recent
developments in profit-sharing and share ownership has been circumscribed. There are
several descriptive reports[1], reviews[2] and exhortatorystudies[3]
but until
a Department of Employment sponsored survey was initiated in late 1984, our
knowledge was limited in scope, and lacked an explanatory and policy focus. The
Department of Employment study comprises two interlinked phases. The first, which is
analysed in part in this contribution, is already complete and involved a large-scale
investigation of British companies[4]. The second, which is currently in
encompasses detailed case studies involving 20 firms contacted in the first phase and
selected to cover contrasting industrial sectors, company sizes, industrial relations
experiences, types of scheme and times of initiation of particular programmes.
The Phase
Fieldwork for the first stage was carried out during the spring and summer of
of the material sought was perforce of a factual nature, but a series of questions were
also included of an explanatory type in order
uncover the origins of the main variations
in practices from one company to another. In
1,125 enterprises were included in the
research (from a total of 1,425 which were contacted during the screening phase), with
a combined coverage of
employees. The companies were largely sampled
*This article is based on an analysis of data from
survey of profit-sharing and employee share ownership
funded by the Department of Employment. The project was initiated in the social science branch of the DE
and the initial design work was undertaken by Gillian Smith. The questionnaires for the survey were
designed jointly by IFF research,
social science branch and Michael Poole. Fieldwork was undertaken
by IFF under the direction of Judy Morrell. The views expressed here are of course entirely those of the
author and do not necessarily reflect those of the funding body.

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