In this chapter, the authors argue that far from the shocking decision of firing employees to leverage their short-term liquidity, organizations may draw other innovative options such as giving company shares to their employees. Employee stock ownership (ESO) plans have the potential to secure financial liquidity for firms while simultaneously providing social inclusion as well as empowerment to people, relating their efforts directly to firms' performance and driving the economic system into a shared capitalism. However, while companies may be solving their financial constraints through ESO, the authors identified a trade-off related to the traditional position of hegemony of firms. They argue that the decision to share the risk through paying wages using firms' stock options derives in a progressive detriment of power and control that some organizations would not be willing to suffer.
“The hottest places in hell are appointed to whom, in time of moral crisis, remain neutral” Dante Alighieri (The Divine Comedy)
TopIntroduction
Global crises are natural drivers for unexpected and difficult organizational decisions. The greater the crises’ possible damages, the greater the trade-offs that organizations will have to be involved within to endure and survive. Those trade-offs would be radical while feasible for some, but likewise opening a Pandora’s Box for others. Nevertheless, organizations would have the opportunity to decide and thrive, or remain neutral and die.
The World Health Organization (WHO) has declared the COVID-19 as a pandemic in mid-March 2020 (WHO, 2020), driving thousands of organizations into difficult and unforeseen challenges regarding their financial situation, supply chain disruptions, massive loss of jobs, severe drops in demand, among many other negative consequences, even including serious threats for their survival. Also, health systems’ resilience around the world were challenged and most of them overwhelmed (Sagan et al., 2020). According to United Nations Conference on Trade and Development (UNCTAD, 2020), foreign direct investment (FDI) would drop down in about 30% during 2020-2021, severely affecting the international financial systems, which in turn would decrease the global annual GDP around 2% (OECD, 2020a) and 5.2% (The World Bank, 2020a), leading worldwide economy into an unprecedented recession (The World Bank, 2020; UNIDO, 2020).
The financial crisis caused by the coronavirus outbreak would drive governments and firms into difficult decisions for them to be resilient, endure, and survive. The corporations face severe trade-offs to stay alive such as firing employees to improving their liquidity. To face these unprecedented challenges and avoid massive layoffs, countries have taken extreme decisions. Soon during the crisis in 2020, the European Union launched Next Generation EU program, including a € 750 billion economic stimulus plan. The US Congress voted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which meant a $ 2 trillion economic relief package. Also, the International Monetary Fund (IMF) provided more than US$ 250 billion to its members worldwide. In addition, The World Bank provided $ 160 billion in financial assistance to developing countries, and the Latin American Development Bank injected $ 2.5 billion into this region.
To comprehensively face the consequences of the COVID-19 crisis, the public aid certainly won’t be enough and radical changes from private sector will help. Moreover, effective ongoing responses as well as the proper rebuild decisions after COVID-19 would involve a multi-actor intervention, including academia, civil society, businesses, and government (Gonzalez-Perez et al., 2021; Jay, 2016). Nevertheless, how businesses reply to the financial crisis caused by the coronavirus would trace one of the most important paths to economic recovery due to their high relation to countries development potential.
We argue that an alternative to address the economic and societal issues at the same time is to turn employees into shareholders of the company they work for. Employee ownership has the potential to share the risk among the different stakeholders (mostly white collar workers) but the employees must hold participation in the management of the company as a counterpart. Since top executives in a firm seem quite related to its financial performance, it has sense sharing the risk with these wealthy enough actors in the system (Kolitz, 2020). Also, employee ownership has the potential to become an asset builder for blue collar workers, providingfree shares for them and other benefits that at the end night develop these alternatives in the local financial market. Sharing the risk and power implies a radical change in the spirit of traditional capitalism leading to shared capitalism. Kruse et al (2010) defines shared capitalism as “employment relations where the pay or wealth of workers is directly tied to workplace or firm performance. In many of these firms employees also participate in employee involvement committees or workplace teams that help management make decisions regarding the economic activities of the firm” (p. 1). Hence, the research question that we aim to address in this chapter is: How feasible could be to develop an employee ownership program in order for companies to be able to overcome the negative consequences of the COVID-19?