Employee share schemes—Are they really worth it?Employee share schemes—Are they really worth it?

A few years ago, we introduced a pricing change to make Sharesies more accessible for investors with smaller balances. This reduced fees for the majority of our customers, and actually reduced our revenue. 

We didn’t do this for short-term commercial reasons—we did it because it was the right thing to do. And yet, the feedback from customers was largely negative. This highlighted two things for me. 

Firstly, the inherent difficulty of change and the wariness it often breeds. And secondly, the importance of (good) communication.

We failed to effectively convey to customers that they would, in fact, be better off. And while we could point to the data, what mattered was ensuring that customers understood how they would benefit. And we didn’t do that. 

Our failure to communicate effectively meant that an advantage turned into a drawback. Perception is reality, and communication is paramount. I have (re)learned these lessons over and over again, both in the workplace and in my personal life. 

Another area where we can see this in action is employee share schemes. Companies invest significant resources to issue shares to their staff, yet often falter at the final hurdle: communicating the benefit. The employee experience must clearly convey the value of the scheme, because the company’s ROI depends on it. If the employee doesn’t see or understand the value, companies will not realise the potential benefits of a more loyal, aligned, and incentivised workforce.

And those potential benefits are huge. Deloitte's recent report on employee stock purchase plans revealed how S&P 500 companies with such plans outperformed the market over a decade. The research analysed metrics like cumulative total shareholder return, EBITDA, earnings per share, and revenue growth from 2013 to 2022, consistently showing long-term outperformance for companies with employee share schemes.

Moreover, Deloitte analysed the benefit packages of companies awarded as exceptional employers, and found that those with employee stock purchase plans won twice as many "best places to work" awards as those without. Giving employees a financial stake in the company can enhance individual and collective performance, as they directly benefit from the company's growth.

The report also noted that while companies might hesitate to offer employee share schemes due to administrative costs and operational burdens, these are outweighed by the potential benefits—provided the employee experience is compelling and the scheme's value is clearly communicated.

To provide an accessible and integrated employee experience, we must take advantage of technology. The tech solution you choose should clearly demonstrate the value of the scheme in ways that are tangible for the employee. This allows employees to recognise and appreciate that what they are receiving is a true benefit. Above all, the solution should be design-led.

Quality design can greatly elevate communication, making the complex seem simple. We brought that principle to bear when we created the employee share scheme experience within Sharesies Business. We had to create an experience that would ensure employees could access, understand, and appreciate their benefits—this was the only way that our partner companies could unlock the full potential of these schemes. Enabled by technology, we can foster a more motivated and invested workforce that delivers a true win-win-win for companies, their employees, and ultimately, their shareholders. And that really is worth it.

Disclaimer

The content of this article is general only and current at the time prepared - views and data are subject to change.  None of the information provided is investment, financial, legal or tax advice, and we aren’t liable for your use of the information in that way.