Are you keen to recruit, motivate and retain the most talented employees for your business? Many companies offer ‘extras’ as part of their employee benefits package such as health insurance, a discount perks scheme with national retailers, cash bonuses or sales commission. Some companies even offer free music lessons, or an in-house subsidised bar! While these can help to attract employees to the company initially, will they make them stay if they get a better offer elsewhere?
The answer is, probably not! So if you’re looking to attract and keep your most talented workers, then it might be worth considering one of the government’s employee share incentive schemes. Aside from the obvious benefits of creating more stability in your workforce, and reducing your ongoing recruitment costs, research has show that companies with employees who have a share in the business perform much better overall than those companies that do not. This is because the employees have a vested interest in the company – they want it to do well and are willing to put in the work to make that happen.
If you are considering offering employee share options, you can either have your employees buy-in (share acquisition), or you can award (or “grant”) the shares to them (share options). This does not mean handing over complete control of the company to your employees. There is a great deal of flexibility in how you can design employee shares in terms of voting rights and dividends. You can also place restrictions on the employee’s ability to transfer shares or keep them if they leave the company. There are tax implications to consider with both types of share incentives, and you should take advice on which of these systems is right for your business and your employees.
Using shares to motivate and retain employees can benefit businesses in many ways. Aside from more actively engaging employees, attracting the best talent, and creating workforce stability, these rewards are highly tax efficient both for the employee and the company and there are significant financial savings to be made when compared to other reward mechanisms such as cash bonuses. They are also an effective succession planning tool if the business owner is considering their exit strategy options, as it puts the employees in a much better position to organise a management buy-out.
Are you thinking of offering share incentives to your workforce? Book an appointment here with one of our business advisors to discuss your options.
