ESOPs Essays

ESOPs Essays ESOPs Essay ESOPs Essay There are numerous studies being conducted the world over to determine the interaction of several factors. Most of the research has the objective of evaluating the performance after the implementation of some programs. The business community from time to time institutes some programs that are thought to expand the business in one way or another. Various methodologies are available in literature and researchers are always presented with the difficulty of choosing one methodology over another. The varying methodologies are appropriate for different types of research and a clearer understanding of the advantages of one methodology over the other should be well known. This will lead to valid conclusions and enable researchers to make generalizations about the whole population.In 1974, the United States Congress enacted an Act aimed at encouraging employee own stock in the firms in which they worked. This was to be attained by introducing tax measures to encourage employee stock ownership plans (ESOPs). These measures have seen the numbers of employee owned companies increase to close to ten thousand from just above 1500 such companies. The numbers of employees owning stock also have increase to over eight million (Rosen Quarrey, 1987). A recent study was aimed at finding how the ESOPs had affected the governance of the companies. The research intended to find if the plan had worked to improve profitability and performance at the companies. The study sought to cool of the debate on whether the enactment of these laws was advantageous.The objective of the study was to identify the whether the ESOP companies had recorded faster growth than the other companies. Another objective was to determine whether the employees vigorously contributed ideas that shaped the company to attain any successes. The study took a sample of 45 ESOP companies and data was collected for five years prior and after implementation of the plan. This study design could be compared to the classical experimental design in which subjects under study are divided into two groups: the experimental or treatment group and the control group. In this case, the treatment group was the companies that had implemented the plan while the control group was the other companies that did not implemented the plan.This classical design setup is the best placed design since it controls against other factors that could affect the results of the study. Due to the long duration under which the study was being conducted, there were many factors that could contribute to the success or failure of the companies. The design used in this study was therefore appropriate sine it incorporated the control group. The design also allowed for the pretest and posttest to be performed on the companies. The data collected was for the duration prior to the implementation of the plan and after. This amounts to applying a treatment to some companies and then observing the results after some t ime. The results are than compared with those of the control group. Chances of other factors being involved are therefore minimized. Internal validity test was thus fulfilled. The study controlled against external factors by comparing with industry growth.The data is the most important part of any research. The data to be collected should be relevant and in line with the set objectives. The data collected for this study was data on sales and employment rates. These were the variables to be tested and they were in line with the study objectives. The analysis of the data showed that the implementation of the plan caused a significant positive effect on the performance of the company. The growth of the companies were traced over the duration before the implementation of the plan and compared with the growth over the five years after the implementation. This comparison showed that the growth rates after the plan implementation was much higher. This was rightly concluded to mean that the plan was responsible for the growth.In the analysis of the data also, the study concluded that there were no other factors that could have contributed to the growth. This was based on the tests carried out on other factors and they did not show significant interactions. On whether the implementation of the plan improved corporate performance, the study showed positive change. The ESOP companies that implemented employee participation plans were found to grow up to four times faster than the other ESOPs that did not have such a plan. This again rightly means that encouraging employee participation cultivates better work attitude leading to success of the company overall.The analysis on the non-ESOP companies indicated mixed results when the employee participation plan was implemented. This led to the conclusion that the participation plan works best when the company has converted to an ESOP. The conclusion is valid. If the participation plan was the contributing factor alone to the success of a company, the non-ESOP companies should have equally shown similar results with those of the ESOP companies. The results should have been uniform. The conclusion that the employees participate more in the company’s decision making is therefore justifiable. The explanation that involving the employee’s decisions in the company’s management creates an enthusiasm that motivates them to work harder also holds true.The researchers identified that the companies that allow their employees to own shares with them have better chances of performing well. The companies that intend to change the attitudes of their employees to motivate them to work harder should therefore consider going the ESOP way. The research also concluded that the employees were more likely to be comfortable with their pay since they know the profits belong to them.The above study was well planned and the objectives were well defined at the onset. The variables to be measured had also been clearly defined. The data that was collected was appropriate in meeting the set objectives. The design used in this study allowed the researchers to control the effects from other factors making the results valid. The interpretations give are also based on the data and are correct.