Why share plans are still important
October 29, 2020
Given the nature of our business, it will be unsurprising that we think share plans have an important role to play for companies weathering the current economic storms. However, this view has been reaffirmed by the recent release by HMRC of research it commissioned into share plans.
The research was conducted independently and amongst its various findings were the following key points:
- Employers reported positive impacts on employee engagement, especially for Share Incentive Plan (SIP), Company Share Option Plan (CSOP) and Enterprise Management Initiative (EMI) scheme members.
- Share plans are important tools for recruiting and retaining talented and key staff and employers felt offering share plans enabled companies to remain competitive and improved staff retention.
- Employees participating in share plans often felt more invested in the success of their company, together with an increased motivation to perform and a sense of job security.
These findings support the notions that share plans can improve productivity – something that will be crucial for all businesses over the coming months.
In addition, where cash may be tight or deployed elsewhere, share plans can be one of the most cost-effective ways of rewarding those working hard in your business.
So what steps need to be thought about to make the most out of share plans?
- Know what is out there. A good place to start is our factsheets, details of which can be found in another of this month’s articles here.
- Recognise the workforce that you have. The research highlights the common issue that younger workers have less money to invest. If this is your type of workforce, consider a share plan that comes with no upfront costs to them.
- Encourage people. Whether you have a plan already or are thinking of putting a new plan in, the more people you can include the more effective the plan will be.
- Communicate. Communicate. A share plan will only truly have value if the participants think it does. Make sure you are communicating that value as often as possible.
Our experience over the last 30 years is, without doubt, that the best time to put in place share plans is at the “bottom of the market”. Bringing the workforce together around a common purpose and future vision of growth is essential for all businesses who want to ride out the economic storm.
If you would like further information about the issues raised in this article or to discuss any questions you may have, please contact Stuart James.
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