The high cost of employee turnover made the headlines in October 2022 when it was reported that leaked documents from Amazon revealed staff turnover was costing the multinational technology company $8 billion per annum. These same reports also stated that only one in three new hires stayed with the company longer than 90 days and that these figures were representative throughout all levels of the business.
While numbers of this scale may not be commonplace the price of staff attrition is something that affects every employer.
Staff can leave for a variety of reasons with the PEW Research Centre listing the most common as:
- Low pay
- No opportunities for advancement
- Feeling disrespected at work
It’s little wonder that employee retention is such an important topic for HR Departments the world over. When looking at your employee benefits package holistically one element to consider that has proven successful at helping stem this outward flow is having an equity compensation offering.
The negatives of staff attrition
The cost of staff attrition is more than just the loss of someone walking out the door:
- Loss of knowledge
- Lower staff morale for those remaining
- Cost of advertising, interviewing for, recruiting, hiring, training and bringing new staff onboard – all of which takes time that could be better spent on other activities.
How employee equity can benefit staff retention
Having an equity solution in place can have very positive effects in terms of employee retention. By granting your employees a stake in the business it instils them with a shared purpose, aligning their goals with those of the shareholders. When the company does well they do well.
Financial wellness is the ability someone has to meet both their current and future financial obligations, while also taking into consideration how secure they feel about their financial future. Employers who enhance their employees’ remuneration packages with access to other benefits such as equity compensation, can really make a difference, especially when you take into account that equity plans can also be a more tax-friendly option than the traditional cash award.
Employees, of course, generally favour employers who look after them and will actively seek these out. In turn it’s also widely acknowledged that companies who value their staff and treat them well will most often reap the benefits through loyalty, retention and dedication.
Aligning employee objectives with company goals
Equity compensation schemes perform the dual role of not only helping retain top quality staff, who are less likely to leave if their stock has not yet vested, but can also help to attract new talent. Furthermore in a remote or hybrid environment an employee equity offering could form bonds and strengthen loyalties through common goals, for people who are not necessarily in the same office together.
Factor in a potential economic downturn and you want to give people a further reason to stay in situ and weather the storm. Where plans have a vesting period staff may be less likely to leave before it has matured for fear of leaving money on the table.
Having the right platform in place
A common error companies who don’t outsource the management of their equity compensation schemes make is in not promoting them properly. One of the services we offer is a customized communications package which uses your company’s own branding, so is immediately familiar, explains technical concepts clearly, and encourages readers to engage with and act upon the information.
Our fully digital platform ensures that all that information is in the one place and easy to access. Everything a participant needs is located via our fully digital portal 24/7 – anytime, anywhere – it’s always all at their fingertips.
Ultimately staff who feel valued are more motivated and at Global Shares we know that showing employees what they have is key to driving engagement and really unlocking the power in your employee equity plans.
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Happy employees perform better and you certainly don’t want to see your valued team being headhunted by competitors. Recruiting, rehiring and retraining are expensive. So give them a reason to stay.
Our solution-orientated staff are always happy to answer any questions that you might have or to take you through a no-obligation tour of our platform and communications option.
Get in touch to find out how Global Shares could help with your equity plan management solution. Employee ownership, simplified. It’s what we do.
Please Note: This publication contains general information only and Global Shares is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. The Global Shares Academy is not a substitute for professional advice and should not be used as such. Global Shares does not assume any liability for reliance on the information provided herein.
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Please Note: 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.
