EurWORK European Observatory of Working Life

RHI, Austria: Make work pay – make work attractive


Organisation Size: 
Extractive industries
Making work pay

RHI implemented a very simple and pragmatic share ownership scheme called ‘Four plus one share certificate’, in which the purchase of shares by employees is supplemented by free shares given by the company. The scheme has been developed as a joint initiative of management and the works council. Limited to the Austrian workforce in the beginning, it is now open to employees worldwide, covered by the same rules.

Organisational background

RHI is a mining sector company, with headquarters in Vienna, Austria. RHI produces a wide range of fireproofed, heat-resistant materials mainly for industry (for all industrial high temperature production processes exceeding 1,200° C). In this industry segment, RHI is the leading company in the world market (11%). The company employs about 8,000 employees, of which more than three quarters are employed in 30 subsidiaries outside Austria. The Austrian workforce is predominantly male (70%) with an average age of 40 years. The workforce is relatively high-skilled: only 5% are un-skilled or semi-skilled workers, 45% are skilled, 25% have A-level certificates and 25% are university graduates. Nearly 100% of the employment contracts are permanent, and 95% work full-time. The duration of employment is very high.

RHI has a long tradition of cooperative industrial relations between the works council and management. Both sides define the role of the works council as co-management. Fixed agreements are a common instrument of industrial relations in the company. For example, the agreement on all-inclusive-wages is exemplary for Austria and is considered best practice by the Austrian unions. The personnel policy is characterised by an internal labour market, which means a clear focus is put on internal recruitment for managerial jobs. The company developed elaborate personnel development programmes including extensive support for further training. More than 60 employees in the subsidiary divisions ensure that this is put into practice in an international dimension. The union density in RHI in Austria amounts to 50% of the employees. RHI is a member of the following employer associations: Federal Economic Chamber (compulsory by law) and the Federation of Austrian Industry (voluntary basis).

Description of the initiative

In 2000, RHI implemented a share ownership scheme called ‘Four plus one share certificate’. At first, it was an offer to all employees in Austria: for every four shares they bought they would get one free from the company. One of the main motives for the initiative was to enable RHI employees to benefit from advantages in taxation, the aim being to support share ownership by employees. The advantage consists of a tax exemption on the shares given by the company.

It is not clear whose idea it was originally, but from a very early stage it was performed as a common initiative by management and the works council. They developed the scheme together and worked out the details. According to the mentioned advantages in taxation, the monetary value of the purchase of shares by employees is limited to 5,800 euros a year. This is a precondition for the tax-free purchase, up to a yearly amount of 1,450 euro. To reach social balance in the participation of workers, and especially to make participation of workers who are not able to buy shares by personal savings easier, a second possibility is foreseen in the scheme. Employees can choose a saving option: they dedicate a certain amount of their monthly salary to be saved for shares. As soon as the sum equal to the value of four shares is reached, the employees receive the shares, plus the share from the company. About 10% of the workforce participates in the share ownership scheme. In 2005, it was enlarged to all employees worldwide. In countries with lower wage standards, however (Mexico, for example), participation is an option only for employees from middle management upwards. In Austria, all workers are allowed to participate. Most of the participating employees in Austria realise the yearly upper share limit.

Although employees have full right of disposal of the shares they purchase, the shares provided by the company have to be locked in the share depot for five years. This regulation is not in force for employees who leave the company.

There is no provision regarding the safeguarding of the value of shares. The employees have to take the full risk of fluctuations in the share value. This led to a cautious participation in the beginning, when RHI was in some financial trouble connected with a failed acquisition in the USA. After the stabilisation of the financial situation, the participation of employees continuously increased to the current 10% level.

The works council is in charge of the share depot, and has thereby shared voting rights at the yearly general shareholder meeting.

The company has to reserve a certain amount of shares every year for the scheme. In the past year, 11,000 shares were dedicated to the scheme. The costs for the scheme amount to 285,000 euro per year for the company.

Management states that implementing the share ownership scheme was definitely not a strategic approach to avoid a hostile takeover (more than 90% of RHI shares are widespread shareholdings), a strategy other Austrian companies –Voest, for example – pursued. Management sees it in a pragmatic way as a voluntary employer’s contribution to their workforce, which seems to be plausible against the background of a high income level (compared to the industry sector level) and a number of existing voluntary social benefits. Management wants to provide their employees with the opportunity of using the advantages of taxation. Employee commitment is seen as a general aim, as established by the whole personnel policy and organisational culture of the company. Management regards this share ownership scheme as only one part of the entire personnel strategy. In contrast, for the works council, it is a clear instrument to strengthen the relations of the employees to the company, and at the same time a clear symbol for the partnership model, which is in practice in the company.


The innovative aspect in this share ownership scheme is its simplicity and pragmatic character. The administrative costs for the company are very low. This was one of the preconditions for the implementation from management’s point of view. This is important because high administrative costs and complex calculation systems are often barriers for the implementation of such share ownership schemes by management. This simplicity makes the scheme transparent and understandable for everybody, and especially easier for workers who are not familiar with the share holder process. All employees are covered by the same clear rules, and this a key factor for the worldwide implementation of the scheme; only the taxation in different countries leads to some variation.

The key elements for its success are the cooperative relations between management and the works council, both of whom were involved in the development of the scheme from the beginning. It is explicitly declared as a common initiative of both sides. This factor and the whole personnel policy and organisational culture lead to high confidence of the employees in the company. This confidence in the scheme is a key factor in the relatively high acceptance of the scheme by the employees, even though no safeguarding of the value of shares is included. In this respect, it is not a single and isolated initiative but embedded in the general employment policy of the company.

Exemplary and contextual factors

The cooperative approach of the ownership share scheme, which is normally a sensitive issue, especially for works councils, is exemplary. This is also indicated by the fact that the works council is in charge of the share depot and has thereby the possibility to exercise share voting rights at the yearly general shareholder meeting. The scheme is exemplary, not just because of the innovative nature of the initiative, but also because it represents a clear and simple scheme in the framework of a high trust organisational culture.

Manfred Krenn, FORBA, Vienna

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