| The purpose of this dissertation was to determine the extent to which a company's employee management strategy impacts firm financial performance. The theoretical foundation for this research derives from the stakeholder-agency concept of the firm. Employees are a major stakeholder and hence the effective management of employees has significant implications for overall firm financial performance.; This research sought to conceptually expand upon and to overcome the limitations of previous studies on this topic. Regression analyses were employed relating comprehensive firm financial performance measures to an extensive combination of employee management strategy variables as well as control factors. Data was drawn from the Compustat tapes, the Department of Labor, the Council on Economic Priorities, and the National Center for Employee Ownership for the year 1991.; Within the limitations of the study, the principal conclusions are: (1) Employee Stock Ownership Plans (ESOPs), in the aggregate, tend to have a significant, negative impact on shareholder wealth. The effect of an ESOP can vary by industry and by the proportion of employee stock ownership. When the percentage of ownership is in the 4-6% range, the financial performance of ESOPs approximates that of non-ESOP firms. (2) Profit sharing plans, collectively, seem to have no significant effect on financial performance. Within industries, though, profit sharing programs appear to vary widely with respect to their impact on firm profitability measures. (3) The level of employee benefits, either in the aggregate or for specific industries, seems to have no significant effect on shareholder wealth enhancement. Average benefits, in total, are superior to high or low levels with respect to profitability measures. The effects of benefits, however, on profitability vary by industry. (4) Collectively, the human relations strategy has no direct impact on shareholder value, but this relationship can vary significantly by individual industry. (5) The degree of women's advancement, either in the aggregate or for specific industries, seems to have no significant effect on wealth enhancement. However, this variable does impact profitability measures with the effects differing by industry. (6) In total, low and average degrees of minority advancement tend to have a significant, positive impact on shareholder value. A high degree of advancement is superior to low and average degrees with respect to profitability. The effects on financial performance vary by industry. (7) Pension expense as a percentage of net income has no significant effect on financial performance in the aggregate. However, it does affect shareholder wealth and profitability for specific industries. The particular effect varies widely.; In general, it appears that employee management strategy does impact firm financial performance. The appropriate strategies, however, for the most part, seem to be industry specific. (Abstract shortened by UMI.)... |
