So, lockdown is easing and we are seeing a gradual return to more “normal” routines over the coming months. Employers will be well aware of the strong contribution that employees have made – and will continue to make - to keeping the organisational “show on the road”. Some staff - and senior staff in particular - will have taken salary reductions. Others will have been prepared to go on furlough. Many will have been working from home on a daily basis, sometimes in less than ideal conditions, as they juggle work, home-schooling and caring responsibilities for family members who may be shielding or self-isolating. Sadly, some will even be dealing with bereavement as a result of the virus.
Our People Are Our Business
All of this adds up to a significant 360° set of changes for individuals and their families. Business owners and leaders know that the most valuable asset is their people. So how can we reward this loyalty and determination to continue contributing to business resilience -and even growth - in such challenging times? One clear mechanism for reward and for reinforcing the psychological contract between employer and employee, as well as the legal and financial one, is to implement or enhance an employee share scheme. This is a means of ensuring that employees really have a stake in the company they work for. It also provides an opportunity for people to feel, and be, more aligned with directors’ and investors’ vision.
A Good Time To Share Value
Quite aside from wanting to reward key employees, if a company’s value has been reduced as a result of COVID-19 impacts, now is a good time to explore agreeing a lower valuation with HMRC. This means that employees can be provided with options that are lower cost than they would have been prior to lockdown. While nobody would ever have wished the epidemic to happen, it’s important that businesses retain their ability to contribute to economic well-being and job security. So, this opportunity to agree a lower valuation and reward key employees is an unwanted and unlooked-for “silver lining” in the Covid-cloud that private companies would be well advised to take advantage of.
What comes first?
So how does a company with no share option scheme take the first step? “It can feel a little daunting for a private company that hasn’t explored this before” says Sue El Hachmi, Carbon Law Partners’ share schemes specialist. “Private companies can engage a share scheme provider like Carbon to scope out the principles and key reward mechanisms that will align people to the corporate vision. Once we know the scope, drafting the scheme is straightforward and a whole scheme for an average -sized SME can be implemented within a matter of weeks.”
The return on investment can be significant! Here’s what a current Carbon client said about the positive impact of their share scheme project: “We are working on our scheme during lockdown. It has already helped us secure a fabulous new team member who is committed – and now powerfully incentivised – to help us grow our business as we re-emerge.”
With all good wishes for a successful and sustained post-Covid recovery.
Sue El Hachmi is an expert in employee incentivisation and share ownership structures. Sue is available to explore the options with no obligation.
For further information about Sue El-Hachmi please visit her Carbon Profile.
Or for a confidential discussion about the issues raised here please contact Sue direct: firstname.lastname@example.org