Do Employee Share Schemes really incentivise employees?
It seems the answer is yes, employee share schemes really do incentivise employees and encourage loyalty.
A recent share plan survey carried out by Computershare revealed that employees in plans stay with the Company longer. It also revealed they take a greater interest in the Company's finances, thus meaning the interests of the Company and employees are aligned and the employee then works harder particularly to achieve any goals set, for example performance conditions attached to the vesting of an EMI option.
However this is as long as the employees overcome the first hurdle and actually commit to participate in any plan offered. This hurdle appears to be rather high with the survey revealing that 12% of employees offered share plans opt out as they don't understand what they are signing up to.
The above statistic is a disappointing one for those companies that design and implement plans. At RM2 we offer employee communications, employee FAQ's, help lines and specific email accounts dedicated to employees all as part of our admin services in the belief that if employees fully understand what is being offered they will at least be able to make an informed choice. Although the company may have the employee's best interests at heart (as well as implementing a tax-efficient scheme) if the details of the plans are not made clear to the employees the paperwork and detail can be confusing.
Share schemes are gaining popularity as a tool against the recession so if you would like to discuss the above or speak to one of our expert consultants about an employee share plan, please call 020 8949 5522.