RE: Employee Ownership in Multinationals

[jdoggett <jdoggett@kent.edu>]

The current issue of brining Multinationals (MNC) into the circle of employee 
ownership, especially in the EU, is exciting, perplexing, and confusing.  The 
issue is exciting, because the MNCs may see the tangible benefits of employee 
ownership and promote it.  It is perplexing given that bringing employees into 
the business can reduce MNC autonomy and increase allegiance to locale.  It is 
confusing given that the catalyst may have more to do with an EU directive 
than MNC decision-making.

The 1994 EU directive of establishing European Work Councils had the primary 
aim of improving the rights of employees as it concerns access to information 
and consultation in MNCs.  The purpose of the directive was to provide 
employees with information that significantly affected their lives via three 
mechanisms.  1.  There should be dialogue between management and employees.  
2.  There was to be equal treatment of employees across borders.  3.  Any 
subsidiary of an MNC must act in accord with local customs/practices.

Now, the question for discussants of COG could be: Is there a country in the 
EU that significantly promotes employee ownership such that local laws would 
compel a MNC to provide employee ownership to all employees across the EU?  
Working within guidelines 2 and 3 from above, one could argue that fair and 
equal treatment across borders, taking into consideration local 
customs/practices, would compel a MNC to provide employee ownership to 
employees in all EU member states.  If this is the case, then what is the 
country/ies?  How do we identify corporations with headquarters in the 
country/ies that promote employee ownership?  Have these corporations expanded 
employee ownership in their other EU subsidiaries?  Etc.

I do not know the answers to the questions I posed.  However, I did want to 
provide the information above within the context of this discussion.  The 
recent e-mails seem to suggest, to me and perhaps to me alone, that MNCs may 
expand employee ownership for reasons other than the EU directive.  Maybe they 
did; maybe they did not.  But, I think that discussants, who may not be aware 
of the EU directive, should have knowledge of factors that may contribute to 
expanded ownership.  What do others think/know/believe?

(The information I used for writing this e-mail can be found in: Knutsen, 
Paul. 1997.  "Corporatist Tendencies in the Euro-Polity: The EU Directive of 
22 September 1994, on European Work Councils."  Economic and Industrial 
Democracy.  SAGE Publications: London.  It is important to note that the 
author states the directive, and then he states how most MNCs, which he calls 
Transnational Corporations, do very little to follow the directive.)

Sincerely,
Joseph Doggett


At 08:39 AM 9/25/00 -0400, you wrote:
>X-Originating-IP: [24.4.252.105]
>From: "Don Ward" <donrward@hotmail.com>
>To: cclem@kent.edu
>Subject: Re: Employee Ownership in Multinationals
>Date: Wed, 20 Sep 2000 14:09:17 GMT
>X-OriginalArrivalTime: 20 Sep 2000 14:09:18.0074 (UTC)
FILETIME=[5D7285A0:01C0230C]
>
>Steve: For some time I have liked the idea of bring multinationals who
>believe in employee ownership to the table. David Wheatcroft and I have
>talked about what Wal Mart is doing in England. ie distributing stock to its
>employees there. A retailing multinational like WalMart seems a natural for
>another reason. WalMart wants to be the biggest retail chain in the world.
>The only realistic way to do that is to have customers with disposable
>incomes. Unless their government enriches them, as an inducement to get
>WalMart to that country, the only way potential customers can get money
>legally is through profitable businesses or other enterprises which pay a
>good wage and hopefully provide some sort of stock owning opportunity
>including ownership of the enterprise.
>
>When I worked, my company was a big WalMart supplier. We were employee owned
>and I think WalMart only sold or gave stock to employees. However they were
>big on promoting employee involvment and employee behavior descriptive of
>ownership. I used to occasionally borrow an idea from them.
>
>If a WalMart would get behind the ownership idea world wide and give
>supplier preference to those international suppliers who are employee owned,
>they might give a giant leap to this whole discussion. Companies kill
>figuratively to be a Wal Mart supplier. An employee owned company is not the
>worst condition to have to meet to be a WalMart suppliier. A supplier can
>become very profitable just getting the crumbs off the WalMart table. This
>does not solve the problem of governments who are privatizing various
>departments and functions, except that employees of those organizations are
>also potential WalMart customers and if a WalMart were to lend its expertise
>in training the organization in how to behave profitably who  knows how many
>new stores it could open for them. Best of all the employees who work for
>WalMart would become owners, assuming WalMart did what it did in England.
>
>Note: I am not or have any interest in personally owning any retailing
>stock. I have had this idea for several months and now seemed the ideal time
>to open it up. There are downside risks to being a WalMart supplier, as they
>jockey orders to meet changes in customer demand or reduce in store
>inventories at the end of a quarter. Others may decrie the impact that a
>WalMart has on the mom and pop economy. The Brits can attest to that.
>However, this is the 21st century and globalization is now a way of life.
>
>I will leave it at that.
>
>Don Ward
>
>
>>From: Steve Clem <cclem@kent.edu>
>>To: eotrans@cog.kent.edu
>>Subject: Employee Ownership in Multinationals
>>Date: Tue, 19 Sep 2000 16:17:12 -0400
>>
>>Former NCEO (National Center for Employee Ownership) staff member Veronica
>>Manson, in a 1996 article (which may be found in the NCEO website library)
>>titled "Globalizing Employee Ownership Plans for Multinational
>>Corporations," found that the tendency toward the globalization of business
>>has led to a globalization of the work force, the increased mobility of
>>which has prompted many multinationals to try to maintain uniform
>>employment policies in order to be fair to all of its employees, regardless
>>of where they are stationed.   This has apparently applied to employee
>>ownership plans as well as to more basic benefits and other employment
>>policies.
>>
>>In the U.S., where employee ownership is relatively well-established, ESOPs
>>and other types of ownership programs have been generally shown to
>>stabilize the workforce, lower turnover and motivate employees to "act like
>>owners" when it comes to their own jobs and how they perform them.  For a
>>multinational to implement such a system in its facilities worldwide,
>>however, runs into  problems. Ms. Manson, in the article cited above,
>>listed some features of a new model that may allow the extension of the
>>benefits of employee ownership to employees working in overseas
>>subsidiaries:
>>
>>      1.  The international ESOP trust is established in            a low- or
>>no-tax country;
>>      2.  The foreign subsidiaries make periodic cash            contributions
>>to the trust to purchase
>>          stock of the parent company;
>>      3.  The shares are then allocated to individual            employee
>>accounts;
>>      4.  The company can set vesting schedules;
>>      5.  The contributions to the international ESOP            trust can be
>>determined according to
>>          a formula that takes into consideration the            number of
>>employees in that subsidiary or
>>          other factors.
>>
>>Any comments about its workability? Is this something that has potential?
>>Going a bit further, how can we encourage more multinational corporations
>>that employee ownership is a good thing for both them and their employees?
>>
>>
>>
>
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