- Category: Stories
- Published on Thursday, 03 February 2011 18:10
- Written by Charles Rukuni
- Hits: 259
Ever heard of a company where thousands of millionaires, multi-millionaires and billionaires clomp to work every day?
Most Zimbabweans, hard pressed by economic hardships that have reduced average workers to paupers who earn a third of what they require for their basic monthly needs, would scoff at this as a figment of one's imagination.
But thousands of millionaires and billionaires plod to work every day at companies like Microsoft Corporation, one of the largest software companies in the world. Its chairman William Gates, is the richest man in the world, with his net worth at US$48 billion
One could rightly ask: "What has this got to do with Zimbabwe?" Plenty! Thousands of ordinary-looking Zimbabweans who walk or cycle to work every day, and are generally regarded by their neighbours as poor, are millionaires because their companies have adopted the Employee Share Ownership Plan (ESOP) - same scheme that Microsoft adopted years ago and turned its workers into millionaires.
Dairibord Zimbabwe Limited (DZL), for example, doled out more than $1 billion to its employees in dividends last month. DZL employees own 21.3 percent of the company's stock while management owns another 5.3 percent.
With a market capitalisation of $165 billion, the employees' stake is worth $43.9 billion which technically makes each of its 1 300 employees a multi-millionaire.
The workers bought the shares for only $1.20 when the company was privatised in 1997. Last week the share was trading at $520. An employee who bought 1 000 shares for only $1 200 seven years ago, can, therefore, swap them for $520 000 today.
Though ESOPs appear to be a new phenomenon, they came in with a bang in 1997 when the government launched its privatisation programme. Midlands governor, Cephas Msipa, who was then Minister of State Enterprises and Indigenisation spearheaded the campaign.
By 1999, some 55 000 employees owned shares worth $700 million in 100 companies. But the scheme seemed to have fizzled out after that.
Though Msipa did not know why the scheme seemed to have lost steam, he said last week ESOPs had been identified as the quickest way to empower workers worldwide.
"You bring ownership to the workers, and once they are owners of the company they work harder, you have less strikes, and productivity goes up because it is in their interests to produce because they share the profits," Msipa said.
He said the government had adopted the scheme because they had realised that it was one of the quickest ways of speeding up indigenisation. "We even set guidelines that at least 15 percent of the shareholding of every enterprise that was being privatised should be reserved for workers," Msipa said.
Cletton Mahembe, chairman of the Dairibord Employees Share Ownership Trust (DESOT), who also seats on the DZL board of directors, said companies should give their workers a stake in the enterprises because once workers had shares this created "good rapport between management and employees because they had a common denominator".
He said there had been fewer strikes at DZL since workers were given shares because they knew that at the end of the day any loss in production meant less dividends and a smaller productivity bonus.
"In the past a worker would just stand and watch milk spilling if it was not his or her duty. Today, workers understand that any loss is their loss as well," he said.
A study by Rutgers University in the United States showed that sales, employment and productivity all grew faster when companies gave their employees some shares. Sales grew by 2.4 percent a year while employment grew by 2.3 percent a year.
The study also showed that ESOP companies stayed longer in business and they tended to offer more retirement benefits to their workers.
But there is a hitch. Mahembe said some trade unions were against ESOPs but he said this was probably because they did not understand how they operated. But more importantly, they were afraid ESOPs would rob them of their jobs.
"They often ask how can an employee be transformed into a boss at the same time?"
While the question lingers on, more companies seem to be joining the fray. Hwange Colliery introduced the scheme to all its employees at the beginning of this month.
Marketing and Public Relations Manager John Nkala said the lowest paid employees had been allocated a minimum of 2 000 shares each. Middle level employees were allocated 3 000, section managers 10 000, heads of department 18 000, and directors 25 000.
Each employee could increase his or her stake up to 10 times.
At the current market price of $420 a share any employee with more than 2 400 shares became an instant millionaire.
Delma Lupepe, who took over Merspin, has promised to follow suit. He said he would reserve 20 percent of the company's stake to employees.