Your small or medium-sized business has created a share scheme because you want to reward your employees for their hard work. But does your team know how they’ll benefit from participating in the scheme? Are they aware of when they’ll be able to receive their shares and what value they’ll have?
The key to making the most of your share scheme is engaging your employees in it from the very start. This will help them see the value of their participation, understand how they’ll benefit from doing so, and get them more excited about the value of their eventual vested shares as your company valuation rises.
Let’s explore some tips that will help you keep your team members engaged, whether they’re brand new to your organisation or have been with you since day one.
What should I tell my team when I create a company share scheme?
Whether or not you’ve already taken the step of establishing a share scheme, be it an EMI scheme, unapproved options, or growth shares, keeping your employees informed about why you’ve done this is key.
First and foremost, it’s crucial to communicate why you wanted to establish the scheme. Tell everyone as a group in your own words. You may say “this gives you part ownership in our company,” or “this lets you share in our success.”
Second, you should explain to your team everything they need to know about the scheme itself. You should tell them what the scheme is (for example, EMI) and how it works. You should also share any information about potential tax implications. Use our free slide template which includes all this information.
Finally, each individual employee should receive personal details about their own options. This may include:
- How many options each individual has received
- The current value of those options
- Examples of what those options may be valued in the future, dependent on company growth
- What their vesting schedule looks like
- Any special requirements for vesting or the award of common shares, i.e., individual performance or company performance requirements
Sharing these details will help them understand why you’ve established a scheme as well as how it will benefit them over the coming years.
How can I keep my team engaged with the share scheme over time?
After you’ve created your share options scheme, you should aim to keep your team interested in the process. Doing so will remind them that they have options, and that as your business valuation rises, so does the value of said options.
Keeping engagement high will also motivate your employees. This process of sharing ownership in a company creates happier, more effective workplaces. Your team will have a greater sense of purpose, and they will feel that they’re receiving a fairer share of the rewards of their work.
Here are a few tips to help you keep your team members aware of, and interested in, the share scheme over time:
- Create a recurring update for your employees: This report can be a single document shared with everyone on a quarterly basis or a specialised document included with each employee’s annual review. The report should include information on how much of the vesting schedule has passed, how many options have fully vested, and what goals have been met (if applicable). This can be done automatically with a platform like Vestd.
- Share changes in company valuation with your team: This may impact the future value of vested shares, so it is important to keep your employees informed. Vestd allows company valuations to be added within the platform, giving option holders easy insight into the changes in the value of their shares.
- Keep employees informed on how much is raised from fundraising: This may impact the value of the shares they receive in exchange as well as the company valuation.
- Keep your team informed about any potential exits: This is crucial for those operating an exit-based scheme.
What should I tell new team members about their employee share options?
Since share options can make the difference between taking and declining a job, it’s best to mention your scheme in the same breath as health care and vacation time. If you’re actively recruiting, mention that you offer shares in your job ads and have your managers bring it up during interviews.
When a new employee is brought on, you should include details about the options they’ll receive in their offer letter. You should also ideally provide details about how the share scheme works in your onboarding material.
Be sure your new team members know:
- When they are eligible to participate in the scheme (i.e., if there is a one year cliff)
- If there are any performance criteria required to vest their options
- Any other conditions, including the vesting schedule or if the options are exit-based
- What happens to their options if they leave your company or their working hours are reduced
- The tax implications of exercising their fully vested shares
If options are specifically requested by some employees, it’s especially important to share these details right away, followed by the regular updates suggested above. These team members may care more about the value of their options over time than those who simply view options as an added bonus.
Additionally, since ownership creates a more aligned, effective, and happier team, you should ensure you get those benefits immediately. Don’t let ambiguity about the share scheme dilute its effectiveness.
What else can I do to keep employees engaged with my company share scheme?
Your share scheme can play a big role in keeping your team members engaged and motivated. Research has shown that happy employees are 12% more productive than unhappy ones. Also, if you’re spending all day with your team, you want them to be happy — happy people who feel recognised at work are much easier to be around!
A few more tips to keep engagement with your company share scheme high:
- Ensure that employees know who to ask if they have questions: There should be a set point of contact at your company they can consult if they want to know how much they have vested so far or what their options are potentially worth. A platform like Vestd can also keep employees engaged by giving them instant access to everything they need to know while reducing the overhead for your administrative team, and ensuring you communicate everything compliantly.
- Keep communication going: If there is a change in leadership, an investment that affects your cap table, or your valuation increases dramatically, you may not want to save this for a quarterly report. Your team should be the first to know what is happening and how these events could impact the value of their eventual shares. Treat them like shareholders, since that’s what they will become!
- Document information about your scheme for easy access: Make sure your team can find and read your documents and updates easily, and whenever they like. This might be as simple as using a shared Google Doc or establishing a set of pages in a company wiki like Tettra or Slab. Or if you’re using a platform like Vestd, each employee will have their own login and personal portal with all their important docs in one place.
Keeping employee engagement high will make your scheme more impactful
You’re operating a share scheme for the benefit of your team. You owe it to them to educate them and to find ways to keep them engaged with the scheme as it progresses.
With these tips, you can ensure that your team knows what’s happening with the scheme, how it impacts their options, and, ultimately, how they will share in the profitability of their hard work. And that will keep their engagement — and excitement — high.
Looking for more ways to keep your employees engaged with your share scheme? Book a demo now to learn about Vestd the UK’s most popular platform for small- to mid-sized businesses who want to easily manage their share schemes.