Staff Incentive Programs
Are you a business owner and looking at either retiring or retaining your key employees?
Staff incentives can play a big part in both succession planning and in the retention of key employees.
It is now more evident than in the past that Australian employees are becoming increasingly accustomed to expecting staff incentives, which generally consist of providing your key employees with:
• Above-average wages;
• Staff awards;
• Commissions; or
• End-of-year bonuses.
However, you will find that the incentives above are only good for a short-term and they don’t do much to:
• Retain your key employees
• Reward the key employees who actually really want to make a substantial contribution to your business;
• Assist your key employees to achieve their financial and lifestyle goals;
• Change the culture of your business;
• Improve the overall attractiveness and value of your business; or
• Support the development of your key employees.
Staff Incentive Plans
You may in fact, be surprised to know that very few business owners have any type of staff incentive plans in place that will help to effectively retain their key employees. You may also not be aware that having an effective staff retention strategy can mean the difference between the success and failure of your business.You may even find that it can provide you with a competitive advantage over your competitors when you are trying to retain key employees or even trying to recruit new employees.
You can in fact, acknowledge the valuable contributions made by your key employees by providing them with a suitable Employee Share Ownership Plan (ESOP).
What is an Employee Share Ownership Plan (ESOP)?
“An Employee Share Ownership Plan (ESOP) can be best defined as being an employee-owner program that provides a business’s workforce with an ownership interest in the business. In an ESOP, businesses provide their employees with shares ownership, often at no upfront cost to the employees.”
Can I use ESOP as a Vehicle for Succession Planning?
You will find that many Australian business owners just like you, are using an ESOP as a vehicle for succession planning particularly, where the founder of the business is looking to retire. You can also use an ESOP to assist with:
• Employee engagement;
• Employee involvement;
• Employee motivation; and
• Employee retention.
By providing your key employees with shares in your business and thereby allowing these employees to own part of your business will improve employee and employer relations by:
• Aligning your employees’ to focus on your business’s objectives and in turn enhancing the employees’ commitment to your business’s values and culture;
• Enabling your employees’ to think and act like business owners; and
• Enabling your employees’ to see your business through a new set of eyes and with a brand new perspective.
What are the Benefits of Implementing an Employee Share Ownership Plan (ESOP)?
The benefits of implementing an ESOP can be considerable for both you (the employer) and for your employees. In fact, research overwhelmingly shows that ESOP has enabled many businesses to experience:
• An overall improvement in staff performance;
• A much higher profit;
• A better staff retention of key employees as compared to non-ESOP businesses;
Other benefits include:
• Enabling you to assist your key employees to achieve their financial and lifestyle goals;
• Enabling you to reward any key employee who actually really wants to make a substantial contribution to your business;
• Enabling you to support the development of your key employees;
• Enabling you to see a change in the culture of your business and an improvement with the overall attractiveness and value of your business;
How can I Structure an ESOP?
There is no one-size fits all structure. You will find that structuring and designing an appropriate ESOP will involve Singh Accountants having to give due consideration to your business’s current performance.
Is an ESOP popular with many Business Owners?
Interestingly, new legislation has been introduced to simplify an ESOP and to remove certain tax obligations. The new changes have been welcomed by many small businesses as they allow them to stimulate their business’s growth and to become more competitive within their respective market.
Seek Expert and Professional Advice?
Singh Accountants understands through practical experience the important role that staff incentives play in succession planning and in the retention of key employees. Our professionally qualified public accountants have the know-how and experience to offer you the right advice that will help you when you are deciding on the most suitable succession planning method to adopt or in the retention of key employees.
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