Retain top talent or it's GAME OVER
Liz Hunter, Associate Director at The RM2 Partnership Ltd, looks at the challenges facing UK gaming companies and why they now need to work hard and think creatively to retain their top talent.
There was concern amongst the gaming industry following the June 2010 Emergency Budget announcements regarding the withdrawal of targeted tax relief for gaming companies. A recent study by TIGA, the trade association for the UK's independent computer game developers, now indicates that the UK must do more to attract and retain top developers.
In the study TIGA draws attention to the increasingly uneven global playing field, with some Governments providing huge fiscal incentives and tax breaks to encourage gaming companies to relocate. TIGA's vision is to make the UK the best place in the world to do games business. This can only be achieved with a favourable tax environment that encourages investment into the games industry and supports development businesses. TIGA's priority is to continue to campaign for Games Tax Relief or a similar tax relief which would create a level playing field with overseas competitors, generate investment and increase skilled employment.
The loss of the tax break has highlighted the differences in the levels of incentives offered. Canada is attracting such enterprises by providing offices, offering national and local provincial corporate tax breaks, organising visas and work permits at very short notice if necessary and will spare certain key skill-sets from income tax for a period of time as part of a relocation package. The study found that 18% of companies reported employees leaving UK firms to work abroad.
Whilst this is not an enormous number the lack of emerging companies and imported talent shows a truer, more worrying picture. This could explain the presence of major European and US games companies, some Japanese and growing numbers of small local spin-outs in Ontario & Quebec as well as British Columbia. An estimated 15,000 new games related jobs have been created in Canada over the last few years. Meanwhile the last UK Government was less than supportive of the industry. The US, Canada and France are at an advantage the report found. Whilst the Treasury consider the Patent Box and Research and Development Tax Credits to be beneficial the industry feels these do not go far enough in light of other industry threats materialising from the growing trend for self-publishing.
Until such time as TIGA's policy agenda is embraced by the Coalition such that the playing field is again level, companies who choose to remain in the UK must seek to promote themselves as the employer of choice by thinking creatively about what is going to attract their skilled workforce.
As part of that process employers with existing share option arrangements may wish to review and benchmark their offering to ensure it is competitive, reflects current commercial targets and has been effectively communicated to maximise employee engagement. Those who have not yet implemented an equity plan should consider doing so.
Enterprise Management Incentives (EMIs) are a popular employee share option choice in the tech sector, being both flexible and very tax efficient, to help attract and retain skilled developers and senior management. Companies should therefore seek expert advice about using equity to build teams and obtain a favourable share valuation to ensure that commercial objectives, performance and reward are aligned. Good employee communications will then ensure that staff really understand the benefits of such plans and this is essential in order to retain their talent.
For more information contact Liz Hunter on 020 8949 5522 or via Liz.Hunter@rm2.co.uk.
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Created: October 31, 2011, 3:00 pm