Employee Financial Participation The Irish Experience

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Employee Financial Participation - The Irish
Experience

• Ljubljana Conference 21st June 2006

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The Irish Experience

• George Tuthill
• Senior Business Development Manager
• Computershare Investor Services (Ireland) Limited
• Executive Member Irish ProShare Association
• george.tuthill_at_computershare.ie

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• Introduction
• Revenue Approved Schemes in Ireland
• Benefits of Financial Participation
• Limitations of Financial Participation
• Introducing Financial Participation
• Financial Participation as an Answer to
  Productivity
• Reasons for Employee Financial Participation in
  Ireland

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• How could we Improve in Ireland
• Best Practice
• Corporate Governance
• National Centre for Partnership and Performance
  Survey
• Future in Ireland

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• Approved Schemes in Ireland
• Approved Profit Sharing Schemes
• Save As You Earn Schemes
• Restricted Stock Plan
• Share Option Schemes
• Employee Share Ownership Trust

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Benefits of Financial Participation

• Company
• Flexibility
• Unity of Workforce
• Staff Retention
• Long Term Commitment to Company
• Competitive Advantage over Competitors
• Lower Absenteeism / Lower Labour Turnover
• Employee
• Alternative Remuneration
• Reward and Motivation
• Exemption from Income Tax

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Benefits of Financial Participation contd/

• Economy
• Deepening Partnership
• Securing Commitment to Competitiveness at
  Enterprise level
• Increasing Performance
• Redistributes some of the Wealth Created in
  Enterprise (Argument in favour of Offering Tax
  Concessions)

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Limitations of Financial Participation

• Company
• Costs Management Time
• Dilution of Existing Shareholders
• - Performance Measures
• - Earnings per Share
• - Assets per Share
• External Factors
• - Share Price
• More Shareholders
• - Meetings, Reports, Circulars

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Introducing Financial Participation

• Communication
• Personnel
• Education
• Trust
• Management, Employees, Unions, Government
• Financial Stake

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Financial Participation as an Answer to
ProductivityGAINSHARING

• Financial Measurement and Feedback System
• Focused Involvement System
• Power to Motivate
• Understand
• Believe
• Costs Included in the Measurements
• Feedback
• Payouts

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• Reasons for Employee Financial Participation in
  Ireland
• Introduction by Government of Tax Supportive
  Legislation
• Support by Trade Unions and Employers
• Irish ProShare Association
• Attracting and Retaining Staff
• Contribution to Companys Success
• Companies with Schemes outperform those whose
  Employers are not stakeholders
• Employees more Productive
• Financial Stake in Company

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• How Could we in Ireland Improve?
• Education
• Communication
• Benefit for Both Employer and Employee
• Research

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• Best Practice
• Reward Strategy should Underpin Business
  Objective
• Reward is Performance related
• Performance to be measured
• Measurable
• Objective
• Easily Understood
• Achievable

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• Best Practice contd/..
• Performance Related Bonus
• Corporate Performance
• Divisional/Team Performance
• Personal Performance
• Reality
• Tax Efficient Bonus Substitution Scheme

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• Corporate Governance
• Long-term investor
• Monitoring Company Management
• Collective Involvement
• Works council

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Research - Irish Evidence - ESRI / NCPP
Survey

• Employer Employee Surveys
• 3,500 Irish Companies
• 1,498 Responses 42 Response Rate
• Sample 11,000 Employees
• 5,198 Responses 47 Response Rate
• Home / Telephone Interviews

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Usage of Employee Schemes In Ireland (1)

• 14 of work places have some type of scheme in
  place
• 73 of employees with a scheme are personally
  involved
• Difference by Sector
• Hotels and Restaurants 7
• Construction 8
• Manufacturing 28
• Finance / Business Services 37

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Usage of Employee Schemes In Ireland (2)

• Slightly higher for males
• Increases with age and position Highest levels
  among 40-54 age group
• Increases with education and occupational class
• 3 of unskilled are aware of schemes 33 of
  higher professionals
• Union members reported higher levels in their
  work place 20 versus 13 for non members
• No evidence that the presence of a union leads to
  greater use of financial schemes

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Conclusions of Research

• Companies need to find new ways to improve
  performance
• Financial involvement delivers real and
  measurable business benefits
• Domestic and International Evidence Supports this
  Claim
• Take-up remains low Key considerations
• Sector Expanding beyond financial services
• Size Approaches relevant to small business
• Occupation Expanding beyond a managerial focus
• Impact on Employees Bringing schemes into day
  to day experiences
• Ongoing Work
• Guidelines Including Case Studies
• ICTU, NCPP, IBEC and NCI

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Recommendation

• Enterprise should use employee financial
  participation
• schemes (not just at a management level) to
  promote
• employee commitment to business goals, increased
• productivity and reduce costs.

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• Future in Ireland
• Gain Sharing
• Private Companies
• Link between Employee Scheme and Pension Fund
• Unique Position Working Together
• Employers
• Government
• Revenue
• Trade Union

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NAJLEPSA HVALA