Hillier Hopkins How to
Growth shares come in many diff erent forms
motivate and incentivise your team
James Johnson Director
Hillier Hopkins
T e competition for good people is heating up. Salaries are increasing, and staff appear to be more willing to chop and change jobs whether looking for more money, a step up or simply a change in direction. Never has the war for talent been so keenly felt. That is why it is so important to look at the
measures you can take to motivate and incentivise your team whilst making your business attractive to those looking for their next role. In this article I will touch on some of the
different ways you and your business can achieve this, looking at traditional economic and non-financial incentives.
Financial incentives T ere are three common fi nancial incentives busi- nesses typically turn to when looking to motivate and reward their staff : - Direct share ownership - Share option schemes - Growth shares
Direct share ownership can sound attractive,
with key employees owning a stake in the business. A short-term incentive in the shape of annual divi- dends together with a longer-term incentive based on future growth sounds great. However, consideration needs to be given to what happens if that individual were to leave the business? Is there an option to buy back those shares and what happens if that member of staff were to leave on unfavourable terms? There are also Income Tax and National
Insurance considerations for both the employer and employee. Share option schemes are a more common
way of allowing employees to own a stake in the business. They allow staff to purchase shares in the business at a future date or when certain conditions are met. There are various HMRC-backed schemes – such as Enterprise Management Incentives – that offer favourable tax treatment.
44 ALL THINGS BUSINESS
but essentially allow staff to benefi t from the fu- ture growth of the business that they contribute towards, whilst continuing allowing the business owner to benefi t from the hard work and invest- ment they have made in getting a business to that point. Again, there are tax considerations for both the employer and employee that will need to be considered.
Non-financial incentives The COVID pandemic and new generations entering the workplace has started a shift in what people want from their employer and workplace. In many instances, the pay cheque alone is not enough. People increasingly want their voices heard. Two common approaches are employee
collectives and board representation. An employee collective gives staff a voice at the
top table over the operational side of the business, either in a formal or informal way. T e aim is to create a sense of fairness and a degree of control over aspects of the business. Structures will vary but can include employees collectively owning shares in the business, thus a voice in annual shareholder meetings, through to representation on the board. Business owners will need to give careful
consideration to their own long term aims before implementing any such arrangement. Such arrangements can deter future buyers should an exit be on the cards.
Employee Ownership Trusts For a business owner that is looking to exit and reward staff, an Employee Ownership Trust (EOT) may be an option to consider. As the name suggests, shares of the business are transferred into a trust owned by the employees of the busi- ness. It is a structure used famously by The John Lewis Partnership. There are attractive Capital Gains Tax reliefs
for business owners exiting their business by way of an EOT, with the business owner able to retain some stake in the business. Employees are rewarded with ownership of the business, and who are often best placed to see it continue to grow and thrive. There are, however, strict criteria that need to
be followed that may not make it an appropriate exit for all business owners.
As always, advice before taking action is recommended. If you are interested in fi nding out more about any of the options above, contact James Johnson, Director at Hillier Hopkins Chartered Accountants and Tax Advisers on 01908 232020 or email
james.johnson@
hhllp.co.uk
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68
