What are Employee Share Schemes and why are they becoming so popular for SMEs?
Employee Share Schemes (also know as Employee Share Ownership Plans) are a way for private businesses to offer part ownership to employees.
We’re in a climate of skills shortages where coversations around remuneration are shifting — the employer that can offer the best deal will fill the position. Employees, too, are looking to be rewarded for the value they create for the business. Share schemes can be designed as part of a retention strategy, to increase productivity, or as part of a business owner’s exit plan.
The experts in Employee Share Schemes.
Succession Plus founder and CEO, Craig West, completed his doctoral thesis on ‘Using Employee Share Schemes for Business Succession’ in Australian SMEs. His holistic approach to ESS implentation has made him widely recognised as one of the leading experts of Employee Share Schemes in Australia. To read more about the benefits of an ESS download our Academic Research on ESS Whitepaper here.
Advantages of an Employee Share Scheme as an owner.
- You can attract and retain high calibre staff by offering a direct stake in the business.
- When you want to move on from your business, an ESS can be an effective and efficient way to transfer ownership, compared to sale on the open market
- You may be able to reduce tax obligations by making deductible payments into the scheme.
What makes an ESS attractive to employees?
- Employees given the option of an ESS can see their efforts at work crystalised into financial returns.
- Work becomes more worthwhile and meaningful when operating as an co-owner and investor in the business.
- Unlike commissions and bonuses, financial boons can be released as a liquid asset when it’s needed or most suitable from a tax standpoint.
How to set up an Employee Share Scheme
Many private companies are surprised that they can offer employees shares without going through an IPO. The process requires a valuation before designing an ESS that’s attractive to your employees as well as supports your business objectives.
Your Succession Plus Accredited Adviser will work with you to look strategically at operations and business goals, then fact-find with employees to determine the best Employee Share Scheme (ESS) for your business.
Once a transparent and easy-to-understand scheme is designed, your advisor will make sure employees are clear on what they are participating in, and the benefits they can expect. That can be through in-person or online training for your team, as well as ongoing maintenance of your ESS plan and process. Our proven process ensures that the employee share scheme won’t become a headache for the business owner or its employees.
For more detail, read the free guide on Employee Share Schemes which you can download below.
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