5 Reasons Why You Should Offer Employees Shares of Your Business
Many businesses want to stay on top of the game and ahead over the competitors. Employee ownership often comes up in boardrooms when discussing how to attract and retain top talent.
Offering company shares to employees is not a new concept. It can be traced back to 1950 when the John Lewis partnership passed its ownership to trustees to benefit its employees. In today’s business world, employee ownership, and other benefits, such as using an ESS platform, has a myriad of benefits for you and your employees.
There are many motivations to consider offering your employees shares in your business. If you are not sure, here are a few advantages:
- Attracting Top and Valuable Talent
Talented professionals are always in high demand regardless of industry. That is why it can be hard to attract the crème de la crème if you fail to give them a remarkable reason to join your company.
Your employees will feel valued when you offer them a stake in your company and other ownership opportunities. This will encourage them to stay and provide more value to build your business. It also helps your business to stand out from other companies as not many offer ownership opportunities.
The share scheme you choose to use should offer flexibility and other benefits that will suit the talent you target to attract and retain.
- Enhancing Staff Performance
Employees are inspired to work better when they are offered ownership and shares in the company. They become more invested in the profitability and success of your business. They also work harder and become more engaged in their day to day activities in the firm.
Employee ownership also reduces labor-management disagreements and friction. This is because employees realize that the amount of work they put in is relative to their income.
And there’s more. Employees become more interested in the company’s operations and output. They become less likely to leave the organization because it yields the fruits of their hard work, labor, and career interests. Organizations that offer their employees the company shares experience lower attrition rates.
- Aligning Employee Interests to those of Shareholders
Regular employees are typically never involved in the business decisions within the organization. Such decisions usually affect the overall financial health and wellness, as well as everyday habits that may end up using the firm’s money.
This affects employee output as they become more relaxed with the company’s funds and resources. They will also not consider the expenditure in everyday operational decisions when those decisions don’t directly affect their monthly income.
However, if they are made to understand that they earn more money when the company saves, they become more prudent with the money and resources they use to run and complete projects. They also become more aware of the financial interests of the company, regardless of their positions and roles in the firm.
- Better Options for Small Businesses
The advantages of employee shares are not only enjoyed by workers but business owners as well. Startups often don’t have enough capital and resources at first. Business owners often face the challenge of offering their staff competitive salaries while operating on a shoestring budget. It becomes a tough playing ground for startups, especially when they are targeting to increase their sales.
However, you can make things more comfortable by offering your employees shares in your startup. To start with, your company gets additional capital. This is through the purchase of shares by the employees, their enhanced productivity, and also the affordable salaries compensated to the employees. Your firm can hire the best talent in the market while offering flexible remuneration and ownership in the organization.
- Better Brand Image and Company Relationships
You will notice that your brand builds a more positive and lasting reputation in the industry when you offer your employees shares of your business. Your firm also becomes a hub for essential business relationships, both internally and externally.
This is because employees who are shareholders know they are ambassadors of your brand. They handle stakeholder relationships and external or client partnerships as if their entire lives depended on them.
When you offer your employees ownership benefits in your company, you primarily give them more responsibilities. This results in enhanced productivity in the workplace as they realize that the company’s success translates to their growth financially and career-wise.
Also, you can attract and retain the kind of talent your business needs. Professionals in your industry get a remarkable reason to join and stay in your firm. You are also able to afford your staff even while working on a tight budget. Besides, your brand can build a better image and relationships, both internally and externally.
If you hope to accelerate the growth of your business, employee shares, and ownership benefits is the way to go.