Companies can choose to have employees participate (financially) in the business. How and in what form depends on the organization’s reasons for implementing this instrument. Highberg helps companies design the right scheme for the right purpose.
A financial participation scheme for employees can be an important tool in the battle to attract and retain employees. Employees often feel more engaged when they participate financially in the business in some form. We regularly receive questions from scale-ups to set up a participation scheme so that new employees can benefit if the business becomes successful. But established companies also want to financially involve their employees in the business so they feel like owners to a greater or lesser extent. It’s also a way for companies to differentiate themselves from competitors in the job market.
Participation schemes come in various shapes and sizes, each with their own purposes. It’s important to take this into account when choosing a particular scheme. There’s the collective profit-sharing scheme where employees share in the profits. This scheme is often used by established companies to strengthen motivation and team spirit. Another option is ‘gainsharing’, where a specific goal is set that requires collective effort. This can also be motivating and provide direction. The same applies to stock option schemes. These give employees the right to buy shares in the employer’s company, something we often see with scale-ups. And then there are also certificates, or shares without voting rights.
All these schemes have advantages and disadvantages. They must fit within the employment benefits package and align with the goal the employer wants to achieve. Moreover, designing participation schemes goes beyond what is most fiscally attractive. They also influence employee behavior.
Highberg’s consultants look at the big picture: at the motivation and energy that the schemes unleash, at the direction they can give to the business, and at what makes sense from a fiscal-legal perspective.
