Relationship between ESOPs and Productivity-Case Study of Huawei Company
Student’s Name:
Institution’s Name:
Introduction
Employees are critical to effective running of an organization and their attitude towards work they do have a great impact on their productivity. Organizations today are exploring ways to attain their productivity goals through their employees. The need for sufficient incentives for employees to enable them perform according to organization’s expectations cannot be overlooked (Kruse, 2013). Whether it is financial or non-financial, material or non-material, incentives have a general effect of boosting the morale of employees to work hard towards attainment of organizational goals. Economic motivators, for instance …show more content…
To overcome this challenge, Huawei turned to its employees and offered for sale 15% of its shares at 10RMB per stock to employees. However, the right to vote and control the affairs of the company was not accorded to employees. In 1997, the company modified the ESOP into an incentive model by significantly lowering the price of shares to 1RMB from 10RMB. In addition, employees were entitled to loans to enable them to purchase shares while dividends during this period were dependent on an individual’s proportion of shareholding. It was a powerful economic incentive that encouraged employees to purchase company shares. The ultimate goal was to make employees feel recognized and motivated to work hard. In 2001, the company restructured its ESOP into a virtual stock option in compliance with regulations relating to stock ownership. The amount of dividends now depended upon changes in the net assets of the organization. Share price rose to around 2.6 RMB, but old employees could exchange their shares at the previous price of 1 RMB. These initiatives confirmed that Huawei was committed to pursuing the interests of employees who are the livelihood of the company (Freeman & Blasi, 2010). A significant stake of the company was then in the hands of employees. The intention according to the company management was …show more content…
Any organization that wishes to increase its productivity should consider the effectiveness of ESOP strategy in motivating employees to work extra hard. The positive correlation between ESOP and productivity in Huawei has grabbed the attention of many companies across the world. Today, the list of companies that have adopted this strategy is
Student’s Name:
Institution’s Name:
Introduction
Employees are critical to effective running of an organization and their attitude towards work they do have a great impact on their productivity. Organizations today are exploring ways to attain their productivity goals through their employees. The need for sufficient incentives for employees to enable them perform according to organization’s expectations cannot be overlooked (Kruse, 2013). Whether it is financial or non-financial, material or non-material, incentives have a general effect of boosting the morale of employees to work hard towards attainment of organizational goals. Economic motivators, for instance …show more content…
To overcome this challenge, Huawei turned to its employees and offered for sale 15% of its shares at 10RMB per stock to employees. However, the right to vote and control the affairs of the company was not accorded to employees. In 1997, the company modified the ESOP into an incentive model by significantly lowering the price of shares to 1RMB from 10RMB. In addition, employees were entitled to loans to enable them to purchase shares while dividends during this period were dependent on an individual’s proportion of shareholding. It was a powerful economic incentive that encouraged employees to purchase company shares. The ultimate goal was to make employees feel recognized and motivated to work hard. In 2001, the company restructured its ESOP into a virtual stock option in compliance with regulations relating to stock ownership. The amount of dividends now depended upon changes in the net assets of the organization. Share price rose to around 2.6 RMB, but old employees could exchange their shares at the previous price of 1 RMB. These initiatives confirmed that Huawei was committed to pursuing the interests of employees who are the livelihood of the company (Freeman & Blasi, 2010). A significant stake of the company was then in the hands of employees. The intention according to the company management was …show more content…
Any organization that wishes to increase its productivity should consider the effectiveness of ESOP strategy in motivating employees to work extra hard. The positive correlation between ESOP and productivity in Huawei has grabbed the attention of many companies across the world. Today, the list of companies that have adopted this strategy is