COMMON FEATURES OF BEST PRACTICES

Erik Poutsma and others: 13 features of best practices - 2001
Expert Group for new Belgian legislation - 2000
Communication of the European Commission - 2002
Fourth European Meeting - Bilbao Mondragon 2002
US Committee for Effective Employee Ownership - 2005


  Erik Poutsma and others: 13 features of best practices (September 2001)
The most complete summary of European features of best practices was presented by Erik Poutsma and others in a Draft Report on "Practices of financial participation in Europe - Features of best practices". More information
These are the 13 features of best practices:

1. Principles of Alignment of interest
2. Primary objectives are identification and add on saving
3. Plan development with employee representatives
4. Collective schemes with voting rights
5. Schemes are co-managed by employee shareholder representatives and other stakeholders
6. Schemes allow for a fair distribution and allocation of shares
7. Partipation in schemes is voluntary
8. ESO is embedded in functional equivalent HR practices
9. ESO supported by broad communication and consultation practices on business matters
10. Parallel participative structures ; layers of participation
11. Well established internal market
12. Schemes are evaluated and changed regularly
13. Training for financial participation

  Expert Group for new Belgian legislation (March 2000)
Here are the common principles adopted by social partners and main political parties for the new Belgian legislation of May 2001. More information

1. Voluntary basis
2. Collective consultation
3. Collective mechanism
4. Pre-defined formula
5. Distinction between wage and EFP
6. Broadly based
7. Transparency in corporate governance

  Eight General principles within the Communication of the European Commission (July 2002)

1. Voluntary participation
2. Broadly based
3. Clarity and transparency
4. Predefined formula
5. Regularity
6. Avoiding unreasonable risks
7. Distinction between wage and EFP
8. Compatibility with worker mobility
                                                More information

 

  ERIK POUTSMA AND OTHERS: 13 FEATURES OF BEST PRACTICES (details)

The most complete summary of European features of best practices was presented by Erik Poutsma and others in a Draft Report on "Practices of financial participation in Europe - Features of best practices" in September 2001. Other contributors were: Eckhard Voss, Peter Wilke, Robert Tchobanian, Hiro Nohara, Olivier Blacas, Karsten Kruger, Panu Kalmi, Erna Bruin, Fred Huijgen, Andrew Pendleton. The Final Report will be published soon. The following presentation is made by EFES on basis of the draft report:

WHAT ARE FEATURES OF EFFECTIVE SCHEMES? (based on pages 25 to 29 of the Draft Report)

What are the features of effective schemes? What follows is a draft outline of possible dimensions that influences the effectiveness of schemes. We do this by highlighting the following:
·         The objectives that are set including the alignment of interests
·         The main actors and their participation in plan development and organization and monitoring
·         The relationship with participation in decision making

Before to proceed with the features of best practices we must state that effective schemes are conditional and that there is no universal best scheme. Apart from differences due to country specific factors there are also company specific factors that influence the type of scheme. Most schemes can be tailored to the needs in a specific situation. This means also that there is a dynamic in schemes and that it should be allowed to change schemes in time. The next features of effective schemes should be treated as domains for discussion.
We defined effective as follows: Effective schemes are those schemes that meets the objectives of identification and alignment of interests, add on employee saving, influence of employees as a stakeholder.

1. Principles of Alignment of interest
Financial participation is an incentive and an acknowledgment of the value of employees for the company. It increases identification and commitment. Our study made clear that hard economic performance indictors are not the main objectives of financial participation. It is about a sense of belonging and ownership and not a guaranteed future reward.
For effective schemes we may conclude that the promotion of these schemes should not be done by pressing hard economic performance and hard economic returns but by stressing identification and commitment

2. Primary objectives are identification and add on saving
The objectives of economic performance and economic returns are enhanced through other practices that is more or less related to performance related appraisal and pay. In most cases there is some other measures taken to cover this objective. In a number of cases stock options are used in this sense. Actually this can also be used to develop clear reward in a shorter term. Also there are companies that reward economic performance with becoming shareholder or giving shares. The problem with the use of financial participation schemes for enhancing economic performance is that the relationship between individual performance and the performance of the unit or organization may not be that tied.
We may state that functional equivalent practices to enhance economic performance and economic returns can be developed within the domain of financial participation. However, the rewards that accrue from these bare the risks that they become zero or negative due to factors not influenced by the performance of the person.

3. Plan development with employee representatives
In most cases the management or owner takes the initiative to develop a plan. Of course this is important to have the thing going anyway. Effective schemes appear to start develop the plan in co-operation with employee representatives and allow also to have a position in the trustee, fund or board or whatever legal body that administer the plan.
Effective schemes are schemes that is developed together with employee representatives and allow representatives to have a position in the board or other legal body that administer the scheme.

4. Collective schemes with voting rights
In some cases schemes are individual schemes, that is, they are treated in an individual relationship between employee and company. Most cases develop a kind of collective plan in which there is a collective body that represent the employees that take part in the scheme. These collective schemes have a larger commitment effect due to a sense of solidarity than individual types of plan.
Effective schemes are voluntary schemes with a collective body that represents the employee participants.

5. Schemes are co-managed by employee shareholder representatives and other stakeholders
Another main objective that companies have is to offer an additional saving to employees, but at the same time part of flexible remuneration. Also employees view financial participation as long term additional savings that may become a benefit in the end. Certainly by employees it is not considered as part of wages. Therefore this raises the possibilities of conflict between employer and employee. Companies tend to avoid this potential conflict by carefully treating the schemes as typical additional and by developing extensive consultation and co-management of the scheme.
Effective schemes are schemes that treat the reward from the schemes as additional, but risk baring, saving. In order to treat it that way companies may develop co-management structures for the organization and monitoring of the scheme.

6. Schemes allow for a fair distribution and allocation of shares
In most cases there is skew ness in distribution. In most cases this is related to income and tenure. However, to a certain extent this skew ness can be considered is unfair. Apart from that there are also risks involved when an individual puts much into one basket.
Effective schemes allow for a fair skew ness in distribution and set maximum levels for contributions.

7. Participation in schemes is voluntary
In some cases there is an obligation to take part in a collective scheme. This is viewed as not very effective. Participation in schemes should be voluntary especially when contributions are asked. Also, when shares are given for free in an obligatory manner the identification by employees are effective only in specific situations where there is clear relationship between individual and collective performance.
Effective schemes are voluntary schemes with some matching contribution by employees.

8. ESO is embedded in functional equivalent HR practices
The stated objectives of identification and commitment are not solely coming from employee ownership. Also this research showed that to be effective financial participation, i.e. employee ownership, is part of a bundle of other practices that intends to produce the same or related effects. There are functional equivalent practices.
During the nineties, the focus of research broadened to highlight the interrelationship of this typical human resource-instrument to other bundles of HR-practices, like the relation with human capital strategies, like corporate culture, training- and development-plans, and ownership and control rights. There are also interrelations with participative arrangements in workplaces. It is said that this interrelationship produces- combined with employee ownership- the best effect.
We may conclude that to raise the effectiveness of schemes companies should develop functional equivalent human resource practices.

9. ESO supported by broad communication and consultation practices on business matters
Aligning interests is another result that is achieved with the financial participation scheme. To reach this companies develop, sometimes extensive, communication and consultation concerning the annual budget and evaluation of performance. These are valued as very necessary this goal.
Effective schemes are supported with broad communication and consultation on business matters, more specific, annual budgets and evaluation of past performance.

10. Parallel participative structures; layers of participation
The relationship with indirect participation is important since share ownership suggest a role in the ownership channel. In most cases it appears that employees has limited or indirect voting rights. Only in smaller companies there may exist a joint stock approach with one stock, one vote principle. As mentioned earlier companies develop collective schemes with a trustee or legal body that represents the employees in the meeting of shareholders. In addition they develop parallel structures for communication and consultation on evaluation of past performance and annual budgets. This guarantees commitment in the decision process and avoids any problems in the shareholders meeting. Also, companies tend to have parallel structures for participation and negotiations on labour terms and working conditions. These are not directly related to employee share holding and subsequent voting rights. Companies develop a division of issues to be handled by the employee share holders representatives in the share holders meeting and those issue to be handled by works councils or other representatives.
Next, it appears that the line of command for operations does not change or is hindered by the existence of the scheme.
In addition to that the relationship with daily operation is not apparent other than there that should develop a higher commitment to the work and organization. On the other hand the companies develop structures for direct participation and consultation apparently as a spin off of the more open communication and consultation on business matters. These become part of functional equivalent participation practices.
We may conclude that for an effective scheme parallel structures can be developed that deals with participation in decision making. We may conclude that the following structures may be applied for the different functions they stand for (see next scheme).    

11. Well established internal market
In some cases problems arose with the treatment of newcomers and the effect of employees leaving the company. Plans that have solved this problem have well established internal market and the administering body has a stock of shares or other bonds or ways of financing to be able to be flexible and to handle the dynamics.
Effective schemes have well established internal market and have a body that is able to handle the dynamics caused by newcomers and those leaving the company.

12. Schemes are evaluated and changed regularly
Our study showed that schemes go through stages and life-cycles in which the objectives sometimes are met and sometimes not. In general, there appears to be enthusiasm in the first stages and gradually there come stages where the scheme is a fact of life but does not influence identification, commitment and alignment of interest anymore. Companies try to avoid this through more communications and through changes in the plan and try to sophisticate it. However, we may face the possibility of closing down the plan when it is not effective anymore. It appears that companies not always evaluate the effectiveness of the plan. Share schemes are not a medicine for all evil. Employees may become resistant to it.
Effective schemes are those schemes that evaluate its working regularly and is able to change accordingly.

13. Training for financial participation
One of the main conditions for an effective scheme is that employees know what it is and what the consequences are to an employee owner. Given other functional equivalent measures to promote commitment and identification and alignment of interest with the ultimate aim of improvement of performance and entrepreneurship, training of employees for participation is essential. This is probably the main missing link in all less effective schemes.
The scheme and functional equivalent HR measures can only be effective when employee owners are trained for participation.


  PRINCIPLES FOR A LEGISLATION ON EMPLOYEE PARTICIPATION IN CAPITAL AND IN ENTERPRISES PROFITS
(as presented in the Report of the Belgian Group of Experts)

At the initiative of the European Commission, some general principles have been formulated with which worker participation schemes must comply. These principles originate in the two reports entitled Pepper. They must thus form the basis for the Belgian legislation in this connection, and may be summed up as follows:

• The participation mechanism must be installed at the level of the company. It must rest upon the voluntary participation of the company (voluntary basis).
• The participation mechanism must be the result of collective consultation between the employer and the workers.
• The mechanism is of a collective nature, in other words it is accessible to all the workers in a company.
• The participation mechanism must be based on a pre-established formula where the link with the company’s results appears clearly.
• The participation does not replace the salary, it is an additional income.

These principles insist primarily on the fact that the setting up of a worker participation mechanism must be done on a voluntary basis. Companies are not obliged to set in place a financial participation mechanism.

Secondly, it is important to stress the collective aspect of the participation. This participation must not be just the result of collective consultation; it must, in addition, be open to all workers. The workers’ participation must have a mobilising effect. It encompasses all workers because the commitment of every individual is important. The participation of the workers is thus not an instrument of individual motivation. On this subject, there are other techniques, for example stock options. The objective of worker participation is to stimulate all workers so that they make a commitment to the company.

Thirdly, worker participation calls for wide transparency in the management of the company in such a way as to clearly reveal the link with the company’s results. This principle immediately makes the link with corporate governance. Companies which are well managed create the confidence necessary for the smooth running, as should be the case, of worker participation mechanisms.

Finally, these principles insist on the fact that worker participation can under no circumstances be a substitute for remuneration. Workers are not company executives who have to carry the risks of this. Workers must be able to benefit from their normal income when the company’s results are less satisfactory.

The Belgian group of experts group added two further principles to those contained in the Pepper report:
• The advantages granted in the framework of participation mechanisms which meet the conditions formulated by the working group do not fall under the normal fiscal and quasi-fiscal scheme applicable to remuneration. The working group has mapped out the specific fiscal and quasi-fiscal scheme to which these advantages will be subject.
• Companies will be able to avail themselves of two participation formulas: participation in capital and participation in profits.

Finally, the Belgian group of experts defined a set of conditions requiring to be met by the participation mechanisms in order to be able to benefit from a specific fiscal and quasi-fiscal scheme:

Conditions requiring to be met by the participation mechanisms in order to be able to benefit from a specific fiscal and quasi-fiscal scheme

The participation mechanisms offer a fiscal and quasi-fiscal advantage which the authority is minded to grant. Accordingly, some essential conditions have to be set so that these mechanisms can come into consideration for the granting of these specific advantages. The conditions set out below must be considered as the standards to be complied with in order to obtain a ‘quality label’ giving entitlement to the fiscal and quasi-fiscal advantages.
When these conditions were drafted, the working group also took as a guide the idea that the formal prescriptions applicable to the participation mechanisms should be as flexible as possible. Otherwise, the point is that the participation ceases to be attractive. The method proposed to guarantee this flexibility consists of giving companies sufficient freedom in the choice of a suitable participation mechanism. The working group thus recognises that various models of participation may be envisaged. The result must be that it can satisfy small and medium-sized enterprises, expanding companies and companies in recession equally. This is the only way to make participation attractive for all companies.
The working group has framed a series of conditions. Some of these conditions are obvious and do not call for any long commentaries. This is not the case with other conditions, which do need a commentary.

1. The initiative to set up a participation mechanism lies with the management of the company. This initiative is the subject of consultation in the framework of the legal consultation bodies within the company. In companies where such consultation bodies have not been set up, although they should have been in accordance with the law, it will first be necessary to set up these bodies before a participation mechanism can be started up. In the absence of the consultation bodies provided by the law, a consultation procedure will have to be followed in line with the provisions laid down in the employment regulations.

2. This collective consultation must lead to the conclusion of a specific company Collective Labour Agreement which gives concrete shape to the formal conditions in the participation plan. In companies traditionally outside the mechanism of company collective labour agreements (companies with fewer than 50 workers and no union delegation), workers will have to sign an act of accession which will be submitted for the minister’s approval.

3. The wage standard must be respected. This means that the financial participation can be set in place only where the wage standard has been exhausted. This condition gives concrete shape to the principle that the participation cannot be a substitute for remuneration.

4. The participation mechanism may be set up at the level of the company or the group of which the company is part. If the participation is set up at the level of the company, the profit statement must be made under Belgian legislation on company accounting. If it is at the group level, the ad hoc accounting standard on the consolidation will be applied. In this case, only one collective labour agreement will be concluded for all the Belgian subsidiaries of the group. Certain companies are subsidiaries of a parent company. These companies have to be able to opt for a participation plan of their own, or for a plan applicable to all the Belgian subsidiaries of the same group. This option makes it possible to promote staff mobility between the subsidiaries of one group.

5. A dual ceiling is provided:
 • The total advantages granted in the framework of the participation mechanism may not exceed 10% of the total wage bill (gross remuneration) of the company.
• The total advantages granted in the framework of the participation mechanism may not exceed 20% of the profits. ‘Profit’ here means the profit in the accounting year to be allocated. (In the case of a group, the figure to be used is the net result of the accounting year).
The advantages deriving from the participation mechanism are uncertain and create risks for the workers. That is why it is necessary to establish a ceiling to cap the extent of the participative advantages with regard to remuneration.

6. Every participation mechanism must be open to all the workers in a company. The specific company collective labour agreement will determine whether or not workers are compulsorily required to be part of the participation mechanism. This condition is a compromise between two ideas. The first idea is that the individual workers must be free to decide whether or not to join the participation mechanism set up by the company. The second school of thought focuses on the collective aspect of the participation and lays down the principle that all workers should participate when the company decides to set up a participation mechanism. The compromise lies in the idea that the employers and the workers decide in the framework of their collective consultation whether membership of the participation mechanism should be on a voluntary individual basis or not.

7. By a worker, we mean a salaried worker. No distinction is drawn between limited-term contracts and unlimited-term contracts. The company collective labour agreement may lay down a seniority condition.

8. The advantages deriving from the participation mechanism are in principle the same for all workers. The specific company collective labour agreement may, however, make departures from this rule. In such cases, only the remuneration may be taken as an objective criterion for the distribution of the benefit, it being understood that the maximum advantage may not be more than twice as high as the lowest advantage. This condition is great influenced by the idea that the participation is a collective affair. it constitutes an instrument likely to mobilise all the members of the staff. This may be best achieved by guaranteeing an egalitarian principle. Larger and smaller players will all receive the same thing. This sort of choice also maximises the likelihood that the participation will be accepted both within and outside the company. This egalitarian principle also allows the same contribution to be made by the authority for every worker in the participation mechanism, in the form of the fiscal and quasi-fiscal advantages granted. However, the working group was of the opinion that a certain flexibility in the application of this egalitarian principle was desirable.

9. The advantages granted in the framework of the participation mechanism can be in cash or in shares. The shares awarded must give their holders the normal voting rights. The fiscal and quasi-fiscal processing of the participation in the capital will be more attractive than that which is applicable to advantages awarded in cash. The working group proposes the following fiscal and quasi-fiscal processing:
• The participative advantage constitutes part of the company’s after-tax profit. Half of the corporation tax which is paid on the share of the profit assigned to the participation mechanism is allocated to social security.
• If the participative advantage is allocated in cash to the worker, the worker’s personal share to social security is payable. The balance is subject to a levy of 25%.
• If the participative advantage is allocated in shares, it is subject to a levy of 15%.
Companies’ needs in terms of participation mechanisms may vary radically. That is why there is a need to offer the greatest possible freedom in the choice of the participation formula. In some companies, there may be a preference for forms of direct cash allocation, while in others, the preference will be for the allocation of shares (participation in capital). Companies may also wish to apply both forms of participation. The working group is of the opinion that the specific fiscal and quasi-fiscal scheme must be more advantageous vis-à-vis a participative advantage in shares rather than in cash. The reason is that in the framework of a participation in capital, workers are more closely involved in the company and run more risks. In addition, the shares are blocked for a set period (see condition 10 below).

10. Where the participative advantage is allocated in the form of shares, the specific company collective labour agreement sets the period for which the shares are blocked. The law will determine a minimum period. The point is that it is necessary, in the case of an allocation in the form of shares, to avoid the latter being immediately resold by the worker. In fact, in such a case, there would no longer be any difference between this scheme and an allocation in cash. That is why a period of blockage is indispensable. This period must, however, not be too long, at the risk of making the link between the results of the company and the advantage deriving from them for the wage-earner too fleeting. The minimum duration of blockage proposed is 2 years. Nevertheless, the company collective labour agreement may provide for a longer period of blockage.

11. The specific company collective labour agreement likewise lays down whether the allocation of the participative advantage is to be made via an intermediary structure (for example: participation fund, co-operative society) or not. If an intermediary structure is set up, the specific company collective labour agreement may also stipulate that the workers may opt for the allocation of the participative advantage via the intermediary structure or for direct allocation. The right to vote within this intermediary structure will follow the principle of 1 person/1 vote. The idea underpinning this condition is that for certain companies (for example SMEs, but not necessarily all SMEs), an intermediary structure is indicated for the management of the workers’ participative advantages in capital. For other companies, this is not necessarily the case. The company needs to be able to position itself freely depending on its own needs. The fiscal and quasi-fiscal processing of these two forms of participation in capital must be neutral, in other words it must not favour one form over the other.

12. The participation mechanisms may not be set up to the detriment of employment. Neither must they have the effect of modifying the company’s employment policy. That is why the consultation which must take place within the company ahead of the setting up of a participation mechanism must likewise include a discussion on the employment policy. The conclusions of that discussion must appear in the specific company collective labour agreement. At the macro-economic level, the social partners will regularly evaluate the impact of the participation mechanisms on employment. There is a legitimate fear in some quarters that participation may be used to force the readier acceptance by workers of employment and restructuring measures. The company’s profits after restructuring may in fact increase and therefore serve to the benefit of those who remain. That is why it is necessary to establish clearly, within the framework of the collective consultation procedure, the extent to which the participation mechanisms will have an influence on employment within the company.

The complete Report of the Belgian group of experts is available on http://home.pi.be/~pin13904/DEGRAUWEEN.pdf (English version) and on http://home.pi.be/~pin13904/DEGRAUWEFR.pdf (French version).


EIGHT GENERAL PRINCIPLES WITHIN THE COMMUNICATION OF THE EUROPEAN COMMISSION (details)

The overview of different forms of financial participation has shown the great variety of financial participation schemes. At the same time, there also exist a number of core elements and principles which characterise most financial participation schemes and Member States policies. The general principles identified here reflect this basic consensus and can act as a reference point for the identification of good practice. They should thus inspire the promotion of financial participation schemes across Europe and serve as a guideline for Member States, social partners and enterprises.

1. Voluntary participation
Financial participation schemes should be voluntary for both enterprises and employees. The introduction of financial participation schemes should meet the actual needs and interests of all parties involved, and should therefore not be imposed. Obviously, this does not preclude that some elements of financial participation are made mandatory, or that financial participation is introduced on the basis of legislation or collective agreements. Government support programmes and the provision of a clear legal framework are important elements in promoting the use of financial participation schemes. The involvement of the social partners can also be a major factor in making sure the success of financial participation.

2. Extending the benefits of financial participation to all employees
Access to financial participation schemes should in principle be open to all employees. While a certain differentiation may be justified in order to meet the different needs and interests of employees, financial participation schemes should aim at being as comprehensive as possible and treating employees on similar terms.
Among the main benefits of employee financial participation are the increased identification of employees, creating a feeling of belonging and improving the motivation of staff. Any discrimination between employees would run completely counter to these objectives and should therefore be avoided.

3. Clarity and transparency
Financial participation schemes should be set up and managed in a clear and transparent way. This is important for the acceptance of such schemes and allows employees to assess fully the possible risks and benefits involved. Priority should be given to clear, comprehensible plans, with an emphasis on the transparency for employees. In this relation it is particularly important that employees or their representatives are informed and consulted about the details of financial participation schemes which are to be introduced.
Especially share-ownership schemes will almost inevitably involve a certain complexity. In this case, it is important to allow for adequate training for employees to enable them to assess the nature and details of the scheme in question.
Schemes should also be managed in a transparent way. Enterprises should strictly adhere to existing accounting standards and disclosure rules. In addition employees should receive regular information and should be informed about any developments which may have a major impact on their investment.

4. Predefined formula
Rules on financial participation in companies should be based on a predefined formula clearly linked to enterprise results. This is a major element in ensuring the transparency of such schemes. Also with view to the motivation, commitment and identification of staff it will obviously be preferable to adopt a clear and predefined formula rather than decide on any profit-sharing scheme only ex-post.

5. Regularity
Financial participation schemes should be applied on a regular basis and should not be a one-off exercise. This is particularly important if such schemes are aimed at enhancing and rewarding the long-term commitment and loyalty of staff. It is obvious that this regularity in the application of schemes does not imply that the benefits derived from them remain stable over time. It lies in the nature of financial participation schemes that the bonuses received will vary depending on enterprise results and profits and that in some years no bonuses will be paid at all or that there may be a fall in the value of employees’ investments.

6. Avoiding unreasonable risk for employees
Compared to other ‘investors’ employees tend to be more exposed to adverse economic developments affecting their enterprise. For them, it is not only their investment that is at stake, but potentially also their income and their job itself.
The extent to which financial participation schemes involve risks for employees depends, however, on the details of each scheme. In general, cash- or fund-based schemes are likely to involve only limited risks. Also in relation to share-ownership plans possible risks for employees depend to a large extent on the details of each plan, including for example the length of any retention period, provisions concerning an earlier sale of shares, or ceilings on the amounts that can be invested.
Given the potential risks for employees involved, due consideration should in any case be given in the introduction and running of financial participation schemes to the avoidance of any unreasonable risks. At the very least, employees have to be warned of the risks of financial participation resulting from fluctuations in income or from limited diversification of investments. As set out above, financial participation schemes should also be introduced and managed in a clear and transparent way. When designing financial participation schemes, consideration should be given to develop mechanisms or to give priority to such schemes, which avoid excessive risks for employees taking into account the objectives pursued with the respective scheme.

7. Distinction between wages and salaries and income from financial participation schemes
A clear distinction has to be made between income from financial participation on the one hand and wages and salaries on the other. In some specific cases (for example for top executives or in the case of start-up firms) income from financial participation, and in particular stock options, may constitute an important part of the overall remuneration. In general, however, financial participation cannot be a substitute for pay and fulfils different, complementary roles. Any income from financial participation should therefore be paid in addition and above a fixed wage, which is determined according to national rules and practices. In this respect, social partners can of course bargain over pay and terms of financial participation as they see fit.

8. Compatibility with worker mobility
Financial participation schemes should be developed in a way that is compatible with worker mobility both internationally and between enterprises. Policies towards financial participation in particular should avoid creating barriers to the international mobility of workers.
One of the main objectives of financial participation obviously is to enhance the long-term commitment and loyalty of employees to their enterprise. However, at the same time more and more employees are faced with increased demands for mobility and flexibility in working life. Adequate provisions that take into account both the company’s interest in a long-term commitment of their employees and the employees’ right to mobility should therefore be made in the design of financial participation schemes for dealing with any problems resulting from a termination of contracts.


  Practices of employee share ownership and participation are developing in Europe and we can now go to the definition of a set of common rules
It was a main point of the Fourth European Meeting - Bilbao Mondragon 2002. This could help for the definition of harmonized legislation.
Three main sets of principles are presented below:
1. The most complete set of European features of best practices was presented by Erik Poutsma and others (in a Draft Report on "Practices of financial participation in Europe - Features of best practices" - see below for details).
2. Another interesting work was done by Belgian experts representing social partners and all main political parties, defining common principles and allowing Belgium to define its new legislation on employee financial participation.
3. Finally, the European Commission proposed a set of 8 general principles in its Communication on a framework for the promotion of employee financial participation.
You find a comparative table
clicking here on: Table of European principles on employee share ownership.
4. On the other hand,
the French Federation suggests a rating for companies about their employee shareownership (in French, pdf)


  Committee for Effective Employee Ownership - Practical guidelines for employee ownership in USA - 18.2.2005
In 2004, the National Center for Employee Ownership (NCEO); the Beyster Institute at the Rady School, UC San Diego; and the Global Equity Organization (GEO) created the Committee for Effective Employee Ownership (CEEO). The CEEO's primary goal is to devise principles intended to help companies and investors make appropriate, economically sound choices about the distribution of equity among employees. In addition, the CEEO seeks to provide general guidelines on how companies can best use broad employee equity ownership plans to create more productive and rewarding workplaces. The CEEO bases each of the principles in this document on objective research by scholars, advisors, and the National Center for Employee Ownership; the principles are not simply our opinion or philosophy. The CEEO does not propose these principles as the basis for laws or regulations. Instead, it believes that market-proven benefits of responsible employee ownership can prove themselves without rhetoric. In order to make this happen, business and investment leaders need a deeper understanding of how these various approaches to employee ownership operate. The findings of the CEEO are available at www.nceo.org/ceeo     
Here also available: Committee for Effective Employee Ownership, the full document (49 pages, pdf)

 

 

 

 

 

 


 

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For information and contact
EFES - EUROPEAN FEDERATION OF EMPLOYEE SHARE OWNERSHIP
FEAS - FEDERATION EUROPEENNE DE L'ACTIONNARIAT SALARIE
Avenue Voltaire 135, B-1030 Brussels
Tel: +32 (0)2 242 64 30 - Fax: +32 (0)2 808 30 33
E-mail: efes@efesonline.org
Web site: www.efesonline.org
EFES' objective is to act as the umbrella organization of employee owners, companies and all persons, trade unions, experts, researchers, institutions looking to promote employee share ownership and participation in Europe.