Exploring the possible unintended consequences of Employee Share Ownership Plans (ESOPs) as a BBBEE Instrument.

Abstract

ABSTRACT Background: The first Employee Share Ownership Scheme was introduced in South Africa in 1987. It was used as a mechanism to facilitate disinvestment by multinationals. It has since taken on many forms, liked being used as part of executive remuneration, and now as a vehicle for BBBEE compliance. In 2018, South Africa’s Sasol Ltd introduced an employee share scheme to which only previously disadvantaged individual employees would be beneficiaries. This caused unhappiness to employees that were left out by the scheme. Prior research indicates that employees held a positive perception of ESOPS, however, no studies have been done to determine if employees support an ESOP aimed at boosting a business’ compliance with broad based black economic empowerment, using racial profile as a determinant for beneficiaries. Aim: The primary aim of this study is to determine whether employees support the concept of an ESOP which is intended solely for the benefit of black employees in corporate South Africa. Setting and Participants: This study was conducted online and was open to any employee in any organisation within corporate South Africa, that has access to emails, or social media. Methods: Primary and quantitative data was collected by means of an online survey. The analysis of the data was carried out using descriptive statistic, specifically the Test of homogeneity of variances, One-way ANOVA and Kruskal Wallis test. Results: The results indicated that majority of respondents (48,2%) disagreed with ESOPs for black employees only, while 16,1% neither agreed nor disagreed. As many as 85,7% respondents agreed that businesses should not use racial profile as a determinant for beneficiaries. Conclusion: Employees view businesses not as a mere profit generating entity for shareholders, but as organisations that should serve as catalysts for change and development in societies. However, businesses need to avoid initiatives that are dependent on racial profiling of employees. Especially when the benefits of such initiatives to the are obscure at best and none existent at worse.