Why companies are ‘democratising’ employee share plans in tough times

Industry commentators have recently reported on a number of high-profile companies switching their focus from the pandemic to the next challenge: cost reduction.

Reasons for downsizing include rising borrowing, energy and salary costs, as well as tighter margins and the withdrawal of post-pandemic government support.  

However we are also seeing client companies actively investing in global employee share plans to encourage a share ownership mindset inside their organisations.  

Instead of simply offering workers more money to stay, smart companies are opening the door to increased equity ownership to keep more of their people motivated. 

For example, a number of companies looking to balance their costs have recently approached us about offering free shares, subject to certain conditions, to employees as the organisations pivot their course post-pandemic. 

These new enquiries suggest companies are looking to leverage employee share plans to target and reward employees who contribute to the organisation implementing its new strategy. 

Companies are not merely concentrating their employee share plans on senior post-holders or executives: they're increasingly interested in investing in contributory plans, which are available to a broad employee base. 

Opening up employee share plan access to more employees will enable companies to invest in the kind of talented individuals who have the skills and experience to enable the company to grow, or weather difficult economic times.

The technology that is available to support HR teams and other equity-focused systems has developed strongly over the past few years and can be enormously helpful for global companies in particular. 

The systems behind equity and talent management are becoming ever more closely aligned, with companies investing in technology that can enable them to respond quickly to meet employee needs.

For example some of our clients are focused on enabling employees impacted by rising inflation to access their share money earlier than their plan originally allowed. Employee share plan software can also provide key reporting details at-a-glance, including plan type, and location, as well as, increasingly, sex, age, and 'generational data'.

Such information enables companies to understand how best to target employees with relevant communications.

Employees for their part are more engaged with plan technology as a result of the pandemic. Some 60% of some of our client company participants are transacting through their mobile phones and our research shows that these participants are 3.5 times more engaged with their plan.

Workers increasingly know their worth, and being able to merely hold onto their jobs through a downturn is now less likely to provide the level of satisfaction many seek.

As a result, companies that leverage their data to encourage every employee to help carry the organisation through tough times will be at an advantage.