Business succession planning- Use an employee share plan to provide certainty
“You don’t really have to convince anyone about the benefits of employee share plan; it’s self evident. Engaged employees want to have a stake in their company – surveys (and everything else) show that .And it’s good for the business those employees work for.” Paul Bailey, tax principal at Deloitte.
As the government reviews the taxation treatments of employee share plans – many others spend time wondering why they don’t further promote and encourage them. The benefits are clear for both employees and the business and there are many success stories where performance has improved and the employees now own a slice of the company they work for – thinking and acting and being rewarded as business owners not employees. “For companies, a key benefit of having an employee share plan is the way it helps align the interest of its employees with its own interests.” – Money magazine August 2009.
When combined with a strategic succession plan, which allows a gradual sell down of ownership equity to employees as part of the plan, the two combine to provide certainty in the exit process – certainty as to timing, price, funding ( ownership succession ) and a managed transition of control ( leadership succession ).