Abstract: Employee stock ownership is widely recognized as an effective means of improving corporate performance by enabling employees to participate in the creation and sharing of wealth they create in an organization. The rationale is that Employee Stock Ownership (ESOs) aligns individual goals with corporate goals and help companies to retain staff, attract talent, motivate employees and enable them to share the long-term growth of the company. Previous empirical studies provide contradictory conclusion with some indicating that ESOs enhance company performance and others arguing that just like stock options, ESOs have a net negative effect on performance of a company in the long run. The purpose of the study was to investigate the effect of employee stock ownership on organizational performance a case of Safaricom Limited. This study was conducted through the use of a descriptive design. The population of study comprised of employees who are members of Employee Share Option Plan (ESOP) from Safaricom Limited. The study used simple random and purposive sampling techniques to sample 70 of these employees (10% of the total target population) from the company. The study used both primary and secondary data. Secondary data in this analysis covered a period of 6 years from 2011 to 2016. The study findings show that employee share ownership plans affected organizational performance. This can be show by correlation and regression results that showed positive relationship between the dependent and independent variables. As such employee stock ownership led to increase in commitment, loyalty and productivity among employees. It also led to reduction in employee turnover. This went on to bring about increased organizational perfomance. In the backdrop of the study findings, the following recommendations are made. Since employee commitment was a key determinant of organizational performance, there is need to continue increasing the value of stocks that employees could own in the company. The performance of the company should also be sustained since this would influence the value of the stocks of employees. This is important since higher returns would strengthen the commitment of employees to the organization. This would result in ripple effects such as further increase in organizational performance. Employee turnover was also shown to be influence organizational performance. All efforts should be made by the organization to reduce such turnover. This could be through control of factors that could precipitate such turnover. There should also be efforts to increase the number and value of the stocks that employees could own in the company. This could be a motivation for the company to keep employees in the company, a factor that could sustain the performance of the organization. Employees’ loyalty is vital for the performance of the organization. The organization should ensure that employees were adequately rewarded through ESOP so as to enhance their performance. The company should put in place mechanisms for ensuring that employees could afford stocks in the company. This could be through discounts and loans. The organization should be active in ensuring the productivity of employees. Since stock ownership was one of the methods in which such productivity could be enhanced, all challenges hindering employees from acquiring stocks in the company should be dealt with. In this regard, the company should carry out regular surveys to identify the factors inhibiting the acquisition of such stocks and corrective measures put in place. Regarding areas of further study, there should be follow-up comparative studies in other companies. Each of the study variables could be investigated on its own through in-depth studies. Other variables that moderate the influence of the variables under investigation in this study on organizational performance should also be identified and included in the regression model for this study in follow up studies.
Keywords: Epmloyee Organization and Performance.
Title: Effects of Employee Share Ownership Plans on Organizational Performance: A Case of Safaricom Limited
Author: NDIRANGU FLORENCE WAITHERA, DR ASSUMPTAH KAGIRI
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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