Employee shareholding only empowerment if well designed – Jauch

Home Business Employee shareholding only empowerment if well designed – Jauch

Edgar Brandt

Windhoek-Issuing company shares to employees has been touted by many as an excellent incentive to increase productivity and financially empower workers by providing them with a slice of the company’s profits.
Numerous companies in the country have followed this route with Erongo Marine and the Gondwana Collection the two most recent to announce the issuing of shares to employees.

However, labour researcher Herbert Jauch warns that this practice is merely window-dressing if not designed and implemented properly.

“If a company offers a small minority of its shares to its employees to co-opt workers then its only window-dressing. However, if it is an attempt by the company to give workers a greater say in the decisions and future of the company, then it is a positive step,” said Jauch, who is currently stationed at the Metal and Allied Namibian Workers Union (MANWU).

He added that receiving company shares is purely a financial benefit to employees. In fact, many companies issue shares but then retain the shares when the worker leaves employment for whatever reason.
“When this happens the company did not give the shares but only loaned the shares to the employee and I do not support this type of practice.”

Jauch pointed out what he considers a contradiction, which is when an employee is a shareholder and a member of a union engaged in collective bargaining. “Collective bargaining is an attempt by employees to gain a greater share of the company’s profits while the employee is already sharing the company’s profits through dividends as a shareholder,” said Jauch, adding that this is “a mixed blessing”.

Also weighing in on the employee shareholding debate was Tim Parkhouse, Secretary General of the Namibian Employers Federation (NEF).

“The NEF supports this type of programme. It gives the employee more of a feeling of belonging and understanding that ‘the more and better I work the more I might get in dividends’. It installs a sense of belonging, not just being an employee,” Parkhouse said.

He noted that there are several shareholding systems in place, the most usual of which is to issue shares after a period of service and to add to this shareholding as time progresses.

This employee shareholding is usually associated with long service and loyalty rewards as in most cases there is more commitment from staff who own these shares.

However, Parkhouse said that, most commonly, employee shareholding does not really empower the staff.
“There are usually limitations on what they may do with the shares. In most companies the employee is not allowed to sell them, but receives dividends when declared. As far as I know most companies withdraw the shares when an employee leaves for whatever reason. Otherwise the company would end with a share roll of ex-employees.

Shareholding like this will possibly give the recipient some idea of shareholding dividends and it will give him an additional financial boost, especially if the company is doing well,” said Parkhouse.