Need to know:
- Employee share schemes can give staff a sense of ownership and increase interest in business performance.
- Interest in an organisation’s wider goals and performance can have a knock-on effect on individual engagement levels.
- To harness these benefits, staff must first engage employees with share schemes themselves.
Share schemes may not always be an organisation’s first thought when it comes to rewarding staff, however, this benefit can have some interesting influences on employee engagement and productivity, as well as impact an organisation’s bottom line, potentially reducing staff absence and turnover.
Gabbi Stopp, head of employee share ownership at IFS Proshare, says: “Owning a stake in the [organisation they] work for, however small that stake might be, gives [employees] rights as a shareholder. [They] own a part of the [organisation], have a say in how it’s run and as an employee shareholder, it really focuses [them] on not just the day to day, but the longer term.”
Mark Higgins, head of share plans at Xerox HR Services, adds: “[Share schemes] can be used to align employees with the [organisation’s] values, so if [they] are looking at trying to develop that culture of ownership and understanding and acknowledging the share price, this can be a great tool for developing that engagement. If done well, they can be really valuable to employees; a good result can give employees a lift in terms of achieving their personal aspirations and their longer-term financial security.”
Share schemes are also a useful benefit for multi-national organisations because it is a reward that can correlate to all staff no matter where in the world they are situated, what language they speak or what currency they deal in.
However, if employees and employers are to benefit from the potential for greater engagement in the business that share schemes can facilitate, staff must first understand the value of employee share schemes as a benefit and engage with the schemes themselves.
Take advantage of opportunities for engagement
Engaging employees in an organisation’s share scheme can have a domino effect on business performance, as employees seek to understand more about share prices and the impact they have as individuals on the success of an organisation.
To harness this, employers could make the most of key events to reinforce membership, says Iain Wilson, commercial director at Computershare. These key events provide opportunities to showcase awareness of the available share schemes. Examples include inductions for new employees, any new scheme launches within the organisation, any rule, limit or terms and conditions changes, as well as plan anniversaries. It would also be worth promoting the benefits of the scheme every time a dividend is paid.
Make sure the plan suits the workforce demographic
Identifying the share scheme that will work best for a particular demographic is vital when trying to garner staff interest. Stopp says: “[For] sharesave, you need employees to be able to save a regular amount every month. If [employers] have a workforce where they have zero-hour contracts, people would probably find it hard to commit to saving a fixed amount. That is where the flexibility of share incentive plans (Sips) comes in, because they can contribute an amount up to £1,800 per year, up to 10% of salary, and [they] can change that amount or stop for a few months if they can’t afford it.”
What an organisation hopes to achieve through the scheme offered must also be taken into consideration, says Higgins. For example, if an organisation wishes to boost participation, then awarding free shares could help to bolster take-up, whereas if the aim is to promote ownership, then a sharesave scheme, which encourages regular saving but allows employees the final say on whether they use the savings to buy shares in the organisation or not, may be more appropriate.
Whichever schemes are offered, these should not be viewed in isolation, but rather delivered as part of a coherent reward package, adds Higgins.
Make communication a priority
How share schemes are communicated to staff is essential in driving engagement and demonstrating value. Utilising a mix of channels can help to ensure that messages reach across the workforce. Wilson says: “Always pitch communications to the broadest possible level. The most influential people in helping an employee decide on whether to join a plan or not is not their manager, it’s not the people who sit next to them at work; but the people they take the most lead from is their family, so pitch communications so that people can take it home and talk about it.”
The use of simple and clear language and processes can help to avoid disengagement with communications around share schemes and with the schemes themselves, says Higgins. “Done well and at their best, share schemes are fantastic [because] they engage the workforce, they align interests and they offer significant value,” he explains. “But if the process is complicated or the plans are delivered in isolation, there isn’t that connection or perception of value.”
Ultimately, driving business performance is important for any organisation, and making effective use of employee share schemes to assist with this task can increase feelings of ownership and engagement. This not only contributes to an organisation’s commercial objectives, but also gives back to hard-working staff.
As Stopp says: “Share schemes give that additional corporate glue; they’re another reason for someone to show up, be interested and engaged in what they’re doing every day. It’s a powerful motivator.”