Creating an equity administration platform that is transparent, tax-efficient and easy to access needs to be thought about – a lot! The care you place at the early stage of the planning could make the difference between a decision to stay or go.
According to a recent survey from CareerBuilder in January 2014, one in five workers in the US has said they plan to change jobs this year or next. 65% of the group who expressed dissatisfaction also noted they don’t feel valued by their employer.
With this in mind let’s take a quick look at how an employer can increase the sense of how valuable their employees feel. A host of surveys have shown that one of the most important aspects to showing you value an employee is to offer them a stake in the business. However by providing equity to your employees there comes a new set of responsibilities and the way you set out the equity plan from the start might actually increase their level of dissatisfaction, not improve it.
Transparency is essential
First of all, ask yourself how transparent is your plan? Have you, or do you have plans to set up an equity portal for the employees to access their incentives? According to Mark Griffin, Share Plan Manager for Global Shares,
“I sometimes come across transparency issues when we take over the administration of share plans. In some cases, many of the company’s employees don’t even know they have equity.”
It seems that reaching people by post or even via internal memos is no longer a trustworthy communications method. So the first reason for dissatisfaction can be easily fixed by setting up an online portal which each employee can access, preferably on the home page of the company intranet.
Speed of response
Many of us are reluctant to queue. Even sending an enquiry email to a shared inbox can be fraught with anxiety that the mail goes nowhere, and no one will bother to read it. Simply put a significant issue that employees can cite regarding their equity plans is a perceived lack of response from the administration team.
Make sure that your admin team provides Service Level Agreements and guaranteed response times, for all queries. Your business probably sets itself apart from others with its customer service reputation, so too should your equity administration team go that extra mile to offer the same or similar levels of customer service to your staff.
Tax and Liabilities
When a company introduces a share scheme it is absolutely vital that the plan itself and the team implementing it are fully compliant with tax liabilities, for the employees first and foremost. The introduction of a scheme changes the tax structure immediately, for both employees and for the company. Therefore your plan must include detailed advice and support systems that provide information about; how to self-assess, what new columns on the payslip mean and what overall liability is involved, in this new tax issue.
When an employee is double taxed through an administration error based on their equity holding, how soon will they start to polish up a new resume and start trawling the job websites?
Finally – What will they miss most?
You value the team you have built around you, no matter what level they are at within the company. You can’t please all of the 25% who will inevitably keep looking for new opportunities outside of your business.
But you can make sure that the equity system you have in place runs smoothly, is well thought out, is easy to access and will be sorely missed when the employee decides to leave anyway.