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IT consultancies are using employee share schemes

Posted 15 Nov 2014 15:51 by

We’ve recently written about how and why share plans can be used in specific sectors – so far we’ve considered recruitment companies and professional services firms.

IT consultancies are another type of company that frequently show an interest in share schemes.

These companies can take many forms – for example they may often use individual consultants in addition to, or instead of, directly employing individuals. The nature of the work means that these businesses are extremely reliant on the skills of the people working for them – it’s not enough for a successful IT consultant just to be a great techie, he or she will also need to have good business acumen, strong project management skills and the ability to communicate technical concepts simply, including providing training for users.

So a good IT consultant will be well remunerated, will probably expect regular, decent performance related bonuses, and will be subject to plenty of calls from recruitment agents (all of whom, of course, will be motivated further by their own excellent employee share scheme!). The lure of setting up independently is also strong. Trying to retain the best individuals is crucial and using share schemes – whatever the structure of the business – can be one way of achieving this.

Ten ways to use share schemes in an IT consultancy:

  1. Reach out to consultants as well as employees – there are tax-advantaged arrangements available for all your staff, whatever their employment status
  2. If you prefer, make long term employment status more attractive by offering tax-advantaged employee share options
  3. Steal a march on competitor firms by offering recruits an equity stake as part of the package – the golden hello
  4. Tie your best staff in over the long term – the golden handcuffs
  5. Reward performance by creating specific performance targets for individuals
  6. Increase staff focus on the bigger picture with corporate performance targets
  7. Make the most of tax-advantaged dividend payments linked to company profitability
  8. Get your staff to think like owners & help drive the company towards the big exit event
  9. Free up cash in the company by using share based remuneration
  10. Use your equity based programme to work the hive mind concept

If you think a share plan might help you meet the challenges in your IT consultancy, call us on 020 8949 5522 or email us via enquiries@rm2.co.uk and arrange a free consultation!