Demographic and Attitudinal Correlates of Employee Satisfaction with an ESOP
| Date | 01 December 2004 |
| DOI | http://doi.org/10.1111/j.1467-8551.2004.00422.x |
| Published date | 01 December 2004 |
| Author | Ronald J. Salazar,Sandy Venneman,Daniel E. Hallock |
Demographic and Attitudinal Correlates of
Employee Satisfaction with an ESOP
Daniel E. Hallock, Ronald J. Salazar
*
and Sandy Vennemanw
College of Business, University of North Alabama, UNA Box 5206, Florence, AL 35632, USA,
*
School of Business, University of Houston-Victoria and wSchool of Arts and Sciences,
University of Houston-Victoria, 3007 N. Ben Wilson, Victoria, TX 77907-5731, USA
Email: dehallock@una.edu [Hallock]; salazarr@uhv.edu [Salazar]; vennemans@uhv.edu [Venneman]
A firm’s adoption of an employee stock ownership plan (ESOP) has been hypothesized
to increase employee productivity. Resulting employee productivity is hypothesized to
improve firm profitability and thus ultimately improve stock performance. Most studies
to date have tested potential relationships between the mere presence of an ESOP and
changes in employee productivity and firm profitability. Few studies have attempted to
identify the variables that are associated with employee satisfaction with an ESOP. In
order to maximize the productivity gains associated with the adoption of an ESOP,
researchers must first identify the relationships and variables most likely to positively
affect employee attitudes and subsequently their satisfaction toward an ESOP. The
purpose of this paper is to identify the demographic and attitudinal correlates of
employee satisfaction with an ESOP. This exploration will provide a more substantive
foundation for future research efforts in the area. Correlation and regression results
indicated that employees’ perceived influence on decision-making, perceived pay equity
and perceived influence on stock performance, when examined separately, were each
significant correlates of ESOP satisfaction. When combined with the modelled
employee demographics in a step-wise regression model, only employees’ perceived
influence on stock performance, perceived influence on decision-making and age
explained a statistically significant amount of variance in ESOP satisfaction.
Introduction
The concept of employee ownership of businesses
in the USA has a long and honoured history.
Various forms of employee ownership were fairly
common by the 1920s. The popularity of ESOPs
gained political momentum when Senator Russell
Long (D-LA) became a major proponent of them
during the 1970s. Long was convinced that a
wider diffusion of stock ownership would provide
support for the United States economic system,
in addition to producing asset-based income for
labour. Although the recessionary period in the
early 1990s slowed ESOP growth somewhat, by
the end of 2002 there were 11 000 firms in the
United States that had ESOPs covering over
8 800 000 employees (Girard, 2002). The interest
in the application and expansion of ESOPs has
continued unabated into the new millennium.
Provisions in the Economic Growth and Tax
Reconciliation Act of 2001 contained significant
incentives for business to expand ESOPs (AICPA,
2002). The recent spate of highly visible corporate
bankruptcies created a countervailing force whose
full impact is not yet known.
Problem statement
An employer’s adoption of an ESOP has been
hypothesized to increase employee productivity.
Increased employee productivity is hypothesized
to improve firm profitability and thus, stock
performance. The ESOP-related studies reviewed
have focused on testing relationships between the
presence of an ESOP and changes in employee
productivity and firm profitability. Few studies
British Journal of Management, Vol. 15, 321–333 (2004)
r2004 British Academy of Management
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