Employee Incentives at Richer Sounds

Employee Ownership Strategy Effectiveness

• Richer Sounds, a record company, gives employees shares in the business.
• Employee ownership incentivizes productivity and retention.
• Employees benefit financially from their efforts and have a stake in the business.
• This may lead to increased productivity. Increased productivity may result in business performance improvement, greater levels of loyalty, and increased individual performance. This can strengthen overall productivity, and employee retention.

Profit Per Employee

• In 2018, profit per employee at Richer Sounds was £19,690.
• Employee ownership may improve this figure, impacting sales and profitability directly.

Share Price Impact

• Decreasing share prices negatively impact employee incentive to increase productivity.
• This reduces the incentive for employees to work harder and increase productivity.

Return on Capital Employed (ROCE)

• ROCE declined from 52.1% in 2016 to 33.6% in 2018.
• Earnings per share decreased in 2018 compared to 2017.
• This may negatively impact labor productivity if employees are not sufficiently rewarded.

Employee Power

• Owning 60% of shares gives employees more influence in decision-making.
• Employees may have more power than the owner.

Employee Tenure

• Majority of Richer Sounds employees have worked for many years (over 20 years).
• Suggests low employee turnover/high employee retention rate, indicating a satisfied workforce.

Productivity and Retention Strategies

• Empowerment strategies (consultation, flexible working hours) improve productivity and retention.
• Flexible working hours or a shorter working week can motivate more and increase overall productivity.
• Employee motivation and loyalty is shown by empowering workers to make more decisions.
• Consultation before making business decisions shows employee valuation, increases gratefulness, and increases morale.