There are a range of macro and micro economic factors that are currently impacting employers across the US, regardless of industry. While many of these forces will be beyond the control of companies themselves there are actions which HR teams and Rewards & Benefits champions can take to try and mitigate against them.
Companies may find that adopting some form of equity compensation or medium-to-long-term equity award as part of their employee benefits package could be just the ticket to recruit, reward and retain top quality staff during these turbulent times.
Environmental, Social and Corporate Governance (ESG) goals
The role of environmental, social and corporate governance (ESG) goals continues to be extremely important. ESG can include targets for achieving gender equality, recycled materials used in production and reducing emissions. More and more companies, both public and private, are tying these targets into their equity compensation rewards packages at all levels from the C-Suite to the factory floor.
It presents a view across the whole range of employees and can be a fundamental component in the long-term engagement of people globally.
Diversity, Equity and Inclusion (DEI)
Closely linked to ESG, diversity, equity and inclusion (DEI) targets can include making moves to avoid pay differentials related to any form of discrimination or influence such as gender, age, ethnicity or cultural background and, as a result, can factor into a more positive corporate culture.
By creating a culture that favors inclusion and equitable processes, companies may find an increase in representation and diversity occurring more organically. Equity compensation rewards can help to create a positive workplace culture and build that connection for employees by giving them an actual stake in the company’s future and performance, thereby making them feel valued and appreciated.
Hybrid working
The return-to-office debate will no doubt rage on throughout 2024 and developing a strong hybrid culture will be essential for many employers when it comes to standing out in a competitive jobs market. Flexibility will continue to be key. Employees may still be looking for some level of hybrid or remote working arrangements where they have experience of this before.
Adopting a hybrid approach, where possible, could help to increase employee satisfaction. Hybrid workers can have higher engagement, better overall wellbeing and a lower turnover risk compared to fully on-site workers who are remote-capable.
Regardless of their working arrangements the addition of an equity compensation offering to your employees’ benefits packages can present an opportunity to further connect with employees who may feel upset or underappreciated.
Mergers & Acquisitions
After years of inactivity this area is expected to increase with many commentators optimistic that deal-making is likely to accelerate in 2024.
This is potentially good news for founders and early investors as it may provide them the option to realize a portion, or all, of the value of their investment. A liquidity event is a major occurrence for any business. Being prepared and knowing you have the support of a trusted equity management provider looking after your employee share plans at such a crucial time can be very reassuring.
Going from private to public or making any change to the ownership of your company is also going to be majorly disruptive. Following such an event, many staff may receive large pay-outs, which could lead to staff attrition or the risk of a brain-drain. Companies need to consider ahead of time how they intend to counteract this potential risks.
Executive Compensation
The introduction of the Say On Pay provisions means that there is more focus than ever on the remuneration packages of executives. It’s also becoming more difficult to trying to stand out in a tough jobs market. The role played by Executive Services teams has becoming more important with increased regulation and public focus on the pay and other benefits being offered to top executives.
Involving people in the success of your company via the equity-based incentive plans is a great way to provide motivation, but needs to be balanced with a level of support when it comes to managing the legal requirements they may be exposed to at the C-suite level, like protecting against insider trading activities or use of 10b5-1 plans.
Stability
In the aftermath of the Great Resignation workers are expected to favor stability with many people looking at reasons to stay in their current roles. HR Teams and Rewards & Benefits champions may find long-term equity comp rewards could help with this.
As work locations for US-based workforces have stabilized since the pandemic the majority of employees are working from locations where they expect to stay. This stability brings with it more focus and an appreciation of longer-term goals, objectives and rewards, such as equity based compensation.
While this is expected to influence and lead to a decrease in lateral moves for people a further impact may be on wage packages with employers expected to shift away from signing bonuses or compensation bonuses for new hires, which in turn leaves room for retention-based bonuses.
Inflation, lay-offs and cost-of-living
People continue to balance seeking pay rises based on inflation with the fear of lay-offs, especially since we saw many big companies announcing layoffs over the last year.
Rewarding employees for achieving longer-term goals could help to alleviate the fears that they may have in the short term. By doing this you are presenting them with a long-term picture rather than a reaction to any current economic activity.
Equity compensation can also be a great way to combat these inflation based queries since, by their very nature, these awards tend to focus more on medium and long term goals.
Legislative Changes
Recent changes as a result of the laws around Pay Transparency and requirements on Say On Pay have begun to take root, and their influence will be felt more and more as the year progresses.
As a result of these changes more US states now require job advertisements to include information about salary, bonus, and equity compensation packages, with New York (September 2023) and Hawaii (January 2024) having already introduced requirements for displaying hourly wage rates and salary range in recruitment ads.
Political factors
The presidential election in the United States will no doubt impact the economy in various ways. There is also a major general election scheduled to take place in India during the first half of 2024, while ongoing conflict in various corners of the globe will no doubt contribute to the state of the economic landscape.
Advancements in AI
As the adoption of AI becomes more commonplace people are looking for practical uses that go beyond entertainment. One area of interest is how the technology could be used to analyze big data. AI has the ability to review reams of information so could potentially look for trends, anticipate and identify people who may be at risk of leaving, and instead could be cultivated or discussed away from a job change before they elect to leave. By using it this way to assist with company’s Total Rewards Packages it might prompt reviews, or at least allow for conversations to be had earlier.
Another area of interest is how AI could be incorporated into Comms and Education for HR teams, such as being used to generate answers and resources by giving brief description with the addition of a read more to employees. There will continue to be tech and education and independent learning opportunities to be found here.
Contact Global Shares now
At Global Shares we believe that involving people, regardless of gender, age, ethnicity or cultural background, in the success of the company via participation in equity-based incentive plans is the best way to motivate them to achieve success and create a stronger company both now and into the future.
We provide businesses of all sizes with an all-in-one equity compensation management solution. We handle all the equity award administration so you’ve nothing to worry about.
When it comes to share plan management, whether you’re thinking of developing a new plan or looking to switch providers then get in touch to find out how we could assist with equity design and management. One of our experienced professionals will be happy to answer any questions you may have.
Please Note: This publication contains general information only and Global Shares is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. The Global Shares Academy is not a substitute for professional advice and should not be used as such. Global Shares does not assume any liability for reliance on the information provided herein.
