All blogs

The Advantages of Company Share Schemes over Traditional Pay Increases

Yiannis Papadopoulos

Feb 02, 2023 13:50 pm

As a company grows, it's natural to look for ways to reward employees and keep them motivated. One traditional solution has been to offer pay rises, but in recent years, company share schemes have become increasingly popular as a way to achieve the same goal. But what exactly are company share schemes and why are they becoming a more attractive option for companies?

Company share schemes, also known as Employee Share Option Plans (ESOPs), are programs that allow employees to purchase company stock at a discounted price. The idea behind these schemes is to align the interests of employees with those of the company and create a sense of shared ownership. By participating in a company share scheme, employees can benefit from the success of the company and share in its growth.

So, why are company share schemes becoming a more attractive option for companies compared to pay rises? There are several reasons:

  1. Long-term Motivation: While a pay rise may provide a short-term boost, it doesn't necessarily provide long-term motivation. Company share schemes, on the other hand, can help keep employees motivated and engaged for the long term.
  2. Attract and Retain Top Talent: Company share schemes can be an effective tool for attracting and retaining top talent. By offering employees the opportunity to own a piece of the company, companies can create a sense of shared purpose and show their commitment to their employees.
  3. Cost Effective: While pay rises can be expensive for companies, especially for those with a large number of employees, company share schemes are often more cost-effective. This is because the cost of the scheme is spread over several years, rather than being incurred all at once.
  4. Better Alignment of Interests: By participating in a company share scheme, employees are incentivized to work harder and be more productive, since their financial success is tied directly to the success of the company. This alignment of interests can lead to better performance and higher levels of employee satisfaction.
  5. Ease of Administration: With the advent of software solutions for managing equity and automating the processes of Employee Share Option Plans, administering a company share scheme has become easier and more streamlined. Companies can now easily manage the process of granting options, tracking vesting, and monitoring compliance with the terms of the plan.

While company share schemes have many advantages, they are not without their challenges. One of the biggest challenges is ensuring that employees understand the scheme and its benefits. Companies need to make sure that they provide clear and concise information about the scheme, and that they are available to answer any questions that employees may have. We at OptIn support that with our friendly team we are next to you and your employees every day.

In conclusion, company share schemes are becoming a more attractive option for companies as a way to reward employees and keep them motivated. With the ability to align interests, attract and retain top talent, and be cost-effective, company share schemes can be a powerful tool for companies looking to grow and succeed. And with the help of software solutions for managing equity, administering a company share scheme has never been easier. So, next time you're considering a pay rise, consider exploring the benefits of a company share scheme as a worthy alternative, you can learn more about by scheduling a free consultation with us.