Are Employee Share Options a Good Option?

It’s human nature to want to make a difference. We love to feel as though we’re contributing to the greater good of the world and impacting with whatever it is that we do.

Today, “workplace culture” is the term spreading like wildfire amongst the business sector. Culture is on the frontline of many employees minds and any company ahead of the curve will know this.

Employee Share Option Plans (ESOPs) are just one way we can address employment as being more than “just a job”. Implementation of an ESOP fosters a workplace culture with employees who are vested in the organisational growth of their company.

Here are a few ways ESOPs can be a good option for your business:

Drive innovation

It doesn’t matter whether you are running a global business or growing a veggie patch, the principal of accountability is going to ask you to step up and be your best.

When an employee feels like they have a say in the work they’re doing – or the company’s future – they immediately feel valued. Feeling like part of a tribe or a community creates a space of security and openness. From here creative ideas are born. When employees feel heard and as though their ideas have the potential to be explored; let’s just say you’ve set fire to a wave of innovation amongst your workplace. Share options are a strategic way of inspiring intra-preneurship amongst your organisation.

Inspire productivity

A company without employees isn’t worth a thing. It requires a team to build the vision and continually push the boundaries of the current framework of an organisation. Employees are most productive when they are passionate about what they are doing and as we mentioned before; when they feel valued. When an employee holds a share in the company – providing this sort of incentive inspires them – they’re going to go all the way to do their part because the success of the business correlates to the employee’s performance. It’s no longer your business, it’s their business too. A greater care factor has been introduced. Through ESOP’s employees can reach a new awareness of the way their mindset, work ethic and performance impacts growth, sales and productivity.

Increase morale, retention and employee loyalty

ESOP’s give employees the sense that they are part of something bigger and can improve communication between employee and managers. ESOPs can assist in bridging the gap between hierarchies and dissolve the idea of employees feeling like they’re just another cog in the wheel.

Companies like, Publix, John Lewis and Mondragon are global giants who have successfully implemented these schemes. An employee share option can increase productivity and ensure retention of staff remains low, which simultaneously rewards the company by increasing sales and profitability.

Think back to the jobs you’ve had in your working life that you hated. How did you feel? Did you hate turning up to work? Take sick days? Were you a team player? Or was your attention mainly on the fact you hated what you were doing? Did your best take a back seat along with a lax attitude? Taking past experiences into account can support you in leading your team and workplace to a brighter future. 

ESOPs and Corporate Performance

Research further indicates that companies who adopt employee share options with a participative management style grow 8-11% faster than their counterparts.

ESOPs are not a short term solution rather a long-term sustainability approach to building your business. Employee share options are just one avenue of ensuring staff feel more inspired, valued and vested in the products and services of the organisation in trying times and during prosperity.

From the company standpoint depending on the type of ESOP adopted, sharing schemes can assist in cashflow management, which we know is a priority for many small to medium businesses.

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Neil Parker

MANAGING DIRECTOR

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