An employee share option scheme for your business will compel you to think strategically, about how you are going to communicate it to your team, and how you are going to design it. Here are our 7 reasons to consider an employee share scheme for your business, along with guidance on what you should be thinking about now.

1. Get on the same page

The first thing to consider is your own objectives. Once you have thought this through, the  share scheme should work backwards from your end goal. This will give you certainty and a real reason to push ahead, whilst helping to bring your team on board to help you get there.

Your succession plan may well influence the type of share option scheme you implement too. If you are looking to ultimately pass the business on to your management team, certain structures may well work better. If a trade sale  is perhaps more likely, others may be more appropriate.

2. Build your team

No doubt the design of a share scheme will require you to take the time to think about your team (as individuals and collectively), how to continue to build that team, and what gaps there may be within it.

Without your team, it is unlikely that you will be able to grow your business to the level you need, and even if you could, would you be happy to take a step back in the future and leave the running of your business to them? An employee share scheme is a great way to make you focus on the dynamics at play and give your team the resilience it needs.

3. Motivation

Having a set time frame and working towards it together can be highly motivational not just for you, but also for your key team members. Not only are there targets to reach, but there could well be short-term rewards (see below) as well as long term incentives.

4. Rewards

Whilst your business is growing, it may well be that you don’t have the cash that you might otherwise like to pay your team members a higher salary or perhaps even cash bonuses. By designing a share option scheme in the right way, you can attract, retain and motivate the right people with dividends and/or capital growth playing a vital role and ensuring fair and exciting rewards.

5. Strategy

With your focus in the right place, designing a share scheme for your business can be a great way to make you to take the time to think strategically.

This will be vital to ensure that you are going in the right direction, and more importantly, that you continue on that trajectory as you grow the business. As mentioned at 1. above, you will need to consider your personal objectives, and consider how these fit in with the objectives for the business and your team in the future.

6. Communication

Whilst cash rewards may well keep some people motivated, an employee share scheme can really help to bring you and your team together. Failing to recognise contributions from some or all of your key team members may lead to them ultimately leaving, which could have a hugely detrimental effect on your business and succession plan.

A share scheme gives you the perfect opportunity to openly communicate with your team about your personal plan as well as your plans for the business in the future. Bringing your team into your confidence and showing them how they can be part of that future will no doubt be positive for everyone.

7. Planning and Measuring Performance

You may want your share scheme to include certain strategic goals, and it could well be the case that share options vest over time when those goals are reached. Taking the time to consider and set those goals will give you the framework to measure against them in the future, whilst giving your team the certainty they need in order to stay motivated.

For further information on employee share schemes, please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 or email everyman@everymanlegal.com