5 things to look for in a new UK share plan service provider

The administrative burden associated with running an employee equity compensation plan will increase and become more complex over time. When this point arrives many companies will choose to outsource the management of their plan. But when assessing potential new providers there are some questions you should ask before proceeding.

There are many truisms in business, but one that resonates more than most is that you can’t stand still. What worked yesterday won’t necessarily work today. This applies from payroll management to recruitment to how your employee equity compensation plan is overseen.

Time to reassess?

Maybe on day one you decided to handle your employee equity compensation administration in-house, relying on your own people to keep track of all relevant information on a spreadsheet. Alternatively, you may have partnered with a share plan service provider whose software solution was designed with relatively modest numbers and demands in mind.

These approaches can work reasonably effectively… until they don’t and a point may come when the scale of the task simply moves beyond either a) their level of competence/expertise or b) the ability of their software to cope.

It’s also important to not lose sight of the big picture and remember why you embraced employee equity compensation in the first place, e.g. a way to motivate employees, contribute to a positive work environment and assist in the ongoing battle to attract and retain top talent.

5 things to keep in mind

Looking for a new share plan service provider is no small undertaking, and it is vital that you get it right. That means you need to give yourself ample time to be clear on what your needs are likely to be, not just now but also in the future and then seek out the partner best placed to meet those needs and give you the level of service you require.

With that in mind, when assessing alternative providers, you need to examine their offering from a number of different perspectives, with a view towards ticking your required boxes. Among your key concerns are likely to be:

#1: Training and education

Moving from one provider to another can be a massive undertaking. The ultimate prize is to work with a new partner and system better equipped to meet your needs and those of your participants, but that cannot be achieved overnight. Whether it’s moving from in- house spreadsheets to software or from one software package to another, the transition most likely will not be seamless. There may be some pain along the way as individuals “get to know” the new system, but you will want to ensure that all issues are addressed as quickly as possible.

That means when evaluating prospective new partners one of the things you should look at is to what extent they prioritise training. Do they offer educational modules and supporting documentation designed to ease the transition?

Of course, education is an ongoing process, so you may also want to establish how supportive a new provider will be, whether for general participant inquiries or in how they provide necessary updates relating to changes over time.

If one potential partner seems to put noticeably more time and effort than another into their training and education resources, then that may weigh heavily in your decision-making process.

#2: Human point of contact:

On a related point, it is important to have actual support personnel available when required.

Equity compensation is not straightforward and can be difficult to understand at times. This means people will need help and the more participants you have, the more people will likely require assistance.

Service providers who understand how important it is to their clients to have a named support point of contact or dedicated customer service team available in the event of confusion/difficulties can often achieve a competitive advantage over other companies operating in the same space.

Again, this will be one of the factors that goes into your decision-making process when assessing your shortlist of possible new providers. Download or use our “Stock Plan Services” checklist online to help you find the right partner.

#3: How your data is handled

Data security is a hugely important consideration. You and your people need to be confident that your equity compensation plan provider takes data security and privacy as seriously as you do, and has procedures and processes in place to back up whatever reassurances they may offer.

It is not enough to merely ask a potential new provider if they have robust systems in place to protect the data of clients and their participants. You need to see evidence that they can support whatever claims they make. That means asking about their encryption standards for storage and transfer of information, and also their protocols around data loss prevention and recovery.

It is also advisable to look into whatever history they have around data leaks or breaches. Have these occurred? How did they respond?

Also on the point of how your data is handled, when moving from one provider to another, you will be looking to bring all existing plan information with you. That means possibly a large-scale migration of data to your new provider. It follows that you will need to be confident in their ability to perform that migration without any hitches or glitches. The best way to reassure yourself on this point is to seek out a provider who you know has successfully handled share plan data migration in the past.

These are all key questions and considerations that will help you decide on who to go with.

#4: Scalability

As you continue to grow, will your new provider be able to offer the level of support you require? Most likely, one of the reasons why you want to change providers in the first instance is that you may be on the verge of moving beyond the capacity of your original partner to meet your needs. Logically, you won’t want to go into a new arrangement where the exact same issue may arise a few years down the line. Therefore, you will want to satisfy yourself that any new vendor will be as forward thinking as you are. For example, do they offer global share plan services? Will their software solution be able to handle increased numbers of participants and all that can flow from that?

When seeking to reassure yourself that a prospective partner ticks these vital boxes, take a look at their profile. Have they a worldwide presence? Are their clients limited to early-stage start-ups or do they also work with large multinationals?

Depending upon your own circumstances, you may want to clarify whether a potential partner’s equity management platform can support both public and private companies.

This won’t be a consideration for some businesses, but if you are a private company who may seek to IPO or go through another liquidity event at some point in the future, then it will be a live concern and one that needs to be factored into your decision-making process.

#5: Reputation

Ultimately, you won’t know what it’s like to work with a new partner until you work with them, but that doesn’t mean you have to go in blind. On the contrary, the responsibility for administering your employee share plan is too important to merely hope for the best when you strike that agreement.

With that in mind, when looking for a new service provider, as well as assessing each candidate on the points raised above, you would also be well served to find out all you can about a company’s reputation. If they are well regarded by companies of similar size and scale to your own, then that would go a long way towards offering the desired reassurance.

Get in Touch

Whether you are a company who has handled administration in-house up to now or are looking to move on from your current service provider, J.P Morgan Workplace Solutions could be the partner you need. We work with companies from around the world every day to help them bring their equity compensation and reward strategies to life. Our tech and service-based offering was created to empower employees to easily navigate their workplace incentives with confidence.

Get in touch to speak to one of our experienced customer success managers about how we could help you