COVID-19 driving huge growth in employee share schemes
Back in January, it looked likely that employee share schemes would see reasonable growth across the country through 2020.
As 2019 drew to a close, Westminster statisticians outlined that the year had seen an 8% increase in such company models, a continuation of an ongoing trend going back to the early 2000s.
The stage was set for a record-breaking year.
But then COVID19 arrived, impacting every business in previously unimagined ways. It would’ve been sensible to predict a backslide in share scheme progress.
But emerging data paints a very different picture.
Over 50% keen to offer shares to their teams
Leading market research company, 3Gem, conducted a study in summer 2020 and found that over half of businesses would like to offer shares to employees.
This represents an enormous leap in figures and one with a surprising driving force: COVID-19.
The majority of the 500 founders, owners and senior management team members that took part reported that the pandemic has ignited the urgency to implement a share scheme.
Far from quashing share scheme appetite as anticipated, the pandemic appears to have strengthened corporate zeal for offering up a slice of the pie.
Although we won’t know the official figures for this year until June 2021, industry figures are starting to emerge to support 3Gem’s survey data.
Vestd, the share scheme platform, has reported that revenue ‘will be more than double of last year’, and that the business has plans to double in size ‘by this time next year.’
Partially, this quiet revolution can be explained by company leaders having to consider meaningful ways to energise and motivate staff working from home. Offering a stake in the business is clearly one of the most immediate and rewarding ways to generate drive and staff buy-in - a necessity when the team members are working in isolation and with more distractions than usual.
Maintaining cultures and wellbeing through uncertain times.
It’s apparent that company leaders are also thinking about the expense associated with hiring. 60% reported that by implementing a share scheme, they could improve staff retention, negating the need for recruitment.
56% also felt that shared ownership makes a team more productive and nearly half agreed that companies can strengthen their company culture with share schemes.
COVID has evidently played a surprising role in provoking British executives to fast-track their equity plans.
Nearly half rethinking their teams and structure
Nearly half of all respondents confirmed that the pandemic has induced a rethink of how their organisations operate. 48% also agreed that the global crisis has made them evaluate the importance of their team, spurring them to think of better ways to reward loyalty and tenacity.
The race for equity could also be symptomatic of belts being tightened against the continued threat of COVID. With companies less able to offer competitive salaries, they can attract the best talent by offering equity as part of their reward package.
Ifty Nasir, founder and CEO of Vestd, writes that: “This is great news for everybody across the UK. We need to see a shift in the commercial landscape where everybody is rewarded fairly for contributing to British growth and industry. We know that providing equity foments loyalty and incentivises people like nothing else. The statistics around this subject are very clear. By rewarding others, you strengthen your business and you create the potential to change lives.”
Businesses still wasting money
The survey also found that many businesses are still wasting money by taking traditional but costly routes to setting up and managing their share schemes.
Nearly 80% of respondents will engage solicitors or accountants to help them with their schemes, potentially wasting thousands of pounds per annum. Only 25% stated that they were aware of cost-effective specialist digital share scheme apps.
EMI to dominate
EMI had also come into its own over the past 12 months as the number one choice of startups and SMEs. Over four fifths of businesses operating a scheme are choosing EMI for its simplicity and tax efficiency benefits. These favourable conditions have seen EMI leapfrog all other schemes for the first time.
More research will be conducted later in the year to track the trend and to see which parts of the country are leading the charge with shared ownership.