Employers are increasingly aiming to foster a global share ownership mindset among a greater portion of their workforce to ensure that their
Longstanding industry research shows that employees who participate in their company's share plan tend to
ESPPs, which allow employees to purchase stock at a discounted price, are typically suitable for companies with a broader range of employees across multiple regions or jurisdictions.
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We're also seeing a growing number of private companies using such plans to align their workforce with the firm's financial
By investing in their broader employee base, firms aim to attract skilled, innovative workers who are motivated to contribute to the company's overall goals or help navigate challenging times.
Recent research we funded, prepared by the University of Hong Kong and conducted by the University of Warwick, has revealed that employees' sense of ownership toward their organization increases as the proportion of their wealth held in employee shares grows.
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As employees' wealth from share plans increases, we found that their goals and objectives increasingly align with those of the business. The research also reveals that employees are less likely to quit as their percentage of total wealth held in employer shares increases.
Share plans are, therefore, particularly helpful for companies seeking to retain and reward employees who are heavily invested in their organizations.
We're also seeing companies making more employees eligible for discretionary stock awards, including those in more modest roles – for example, through restricted stock units that bolster a company's commitment to awarding an employee at a specified point in the future. Similar to ESPPs, restricted stock units allow less-senior employees to improve their overall financial situation over time.
As a result, share plans can be a valuable tool for retaining workers who hold specific key business roles or who have specialized, even if they may not yet qualify for executive awards.
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Companies are also using share plans to help align executive attitudes with a company's environmental, social and governance (ESG) goals. For example, we're increasingly seeing companies embedding ESG elements into executive performance-related share awards.
This trend is supported by the findings of the Global Equity Organization's Global Equity Insights survey (GEIS), which noted that almost two thirds (60%) of responding companies worldwide stated that they apply ESG targets into share-based employee compensation.
The survey revealed that the most common areas for such targets are CO2 reduction, diversity and corporate governance. Of the companies surveyed, 84% of companies that responded and confirmed that they apply ESG targets to their management boards.
Companies are increasingly using share plans to incentivize and reward a broader spectrum of employees at various career stages. As part of this trend, they are encouraging them to work hard on their behalf, as well as align their goals and outputs with those of the organization.
Companies are also using share plans to retain key and specialist employees, while also integrating key ESG principles at the executive level. They are using share plans across their organizations to establish and retain a competitive edge, positioning themselves for the future.
