Esop

ESOP increases the employees satisfaction and work motivation as the employee feels that he/she has the opportunity to influence the business. In addition, it often results in higher performance. ESOP is an important measure to perfect corporate governing structure and improve business efficiency. ESOP is an effective countermeasure to fend off hostile takeover. ESOP is beneficial to harmonize beneficial relationship between the labor and capital. Taking America for the example, the ESOP in America meets the needs of all parties. On the one hand, employees become proprietary class and obtain the benefits of sharing capital income by operating the ESOP. On the other hand, under the condition of tax preferences mechanism of America, business owner can obtain more benefits by transferring the shares to employees. ESOP adapts the requirement of the reformation of system of ownership. No matter the developed capitalist countries or the developing planned economy countries, ESOP is appropriate for them. The establishment of ESOP in America decentralized the equity ownership, and make labour income and capital revenue come true for employees. ESOP is a method of retaining talents. Firstly, it is regulated that the obtaining and liquidating of the employee's stocks are limited by seniority of employees in the corporation. Usually an employee can sell or make over all his stock rights but after several years. Employees left the corporation before, will suffer a loss. Secondly, emplyees don't have the reversion of the stocks they are holding. This kind of regulation, that restricks the liquidating, cession, trading and inheriting of the employee's stocks which is used to keep the talents , is called "the golden handcuffs" by European corporations. (7) Comparing with the other forms of employee involvement, it is obvious that ESOP is the optimal choice. There are so many restrictions in participative management, such as time, competence, knowledge, organization's culture, trust and confidence and so on. What's more, representative participation impacts minimally on working employees and it is just a symbol. If a company is interested in changing employee attitudes or in improving organizational performance, representative participation would be a poor choice. Additionally, quality circles have little impact on job satisfaction and the improvement of productivity., show a little time involvement which means that there is little discussion and little follow-up action, and it has a adverse influence on top management involvement.