Getting your employee equity compensation plan management right is vital for any company. But the required tracking and admin of these plans can become increasingly complex or challenging over time. That’s why outsourcing this work to an experienced partner can often be the right choice for many businesses.
Establishing the plan is only part of the battle. At the outset, many companies, especially those new to equity compensation, may believe they can handle the admin workload in-house using spreadsheets or other manual processes. That might be true on day 1, but what about day 1,000 and beyond? The admin burden will increase over time, in terms of both volume and complexity, and, at some point, those demands will likely prove too much for any spreadsheet to capture.
Equity compensation admin pitfalls
Our recently published Trends in Equity Compensation survey report shows that when asked about the pitfalls they had experienced operating employee share plans relying on spreadsheets and underestimating the scale of the associated admin burden over time were among the main pain points.
The alternative is for businesses to look into the possibilities around outsourcing equity plan management to an external partner who can offer robust automated software that will meet your needs and those of your plan participants. Better not to have to learn the hard way and instead make a different choice at the outset or look to make a change before the accumulating data becomes too complex, with all the associated risks and limitations of manual input, such as scalability and the potential for human error.
Why automated software?
Less admin: When you automate your people will spend far less time updating participant information. In a spreadsheet, every piece of information must be entered by hand, whereas a software solution means tasks like generating reports, awarding stock options and monitoring vesting schedules can be run automatically. An indirect but related benefit – it frees your people up to focus on other tasks.
Single source of truth: Equity plan management software eliminates one of the most commonly cited issues with using spreadsheets – version control. Different versions of the same spreadsheet may end up in circulation, with some updates added to one version, but perhaps not to another, eventually leaving you unclear which version, if any, fully captures the overall picture. With a software solution there are no such concerns. Instead, you are presented with one definitive source of up-to-date information on all aspects of your equity plan.
Reduced likelihood of error: When relying fully on manual input, the possibility of error is always present. It’s as simple as a digit tapping the wrong number or entering data into the incorrect cell. Those errors may go unnoticed and accumulate over time, creating an unwelcome, time-consuming mess to be untangled. Automating removes this risk.
Greater scalability: As mentioned earlier, your share plan may grow over time. What might begin with relatively small numbers of participants can expand as your business grows. This can create some headaches if relying on spreadsheets but with an automated approach, it doesn’t matter whether you have 20, 200 or 20,000 participants or whether you choose to introduce new plan types for your employees.
User-friendly experience: One of the key considerations when designing share plan software is to ensure that the platform is user-friendly and intuitive. Participants need to be able to login, view relevant information and make all necessary decisions around their equity awards securely and with ease. An upside is this can help participants to develop a sense of control around their own management of their equity.
How can we help?
J.P. Morgan Workplace Solutions offers its clients a platform designed to help them achieve their goals of saving time and money, cutting back on administration and encouraging employees to become more engaged with their equity awards.
This means ensuring that our software solution offers you the key essentials, such as:
Automate share and equity awards: With our software, admin processes are streamlined and complex procedures simplified. With the touch of a button you can stay up to date on issuing grants and awards, manage vesting schedules and generate the necessary financial reports.
Secure mobile app: With our mobile app and portal, participants can access their information anytime and anywhere. This allows them the freedom to view their awards, perform required tasks and make transactions whenever it suits them to do so.
Reporting suite: Our platform allows you to tailor real-time dashboards to your requirements. Business Intelligence reports mean you can drill down into the data with ease, for example to analyse your participation rates, which in turn will allow you to further develop your equity compensation education and comms strategies.
So whether you are looking to introduce a new plan, move to an automated solution or are even looking to switch providers contact us today.
This publication contains general information only and J.P. Morgan Workplace Solutions is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. J.P. Morgan Workplace Solutions’ Insights is not a substitute for professional advice and should not be used as such. J.P. Morgan Workplace Solutions does not assume any liability for reliance on the information provided herein.
