What are Employee Share Ownership Plans and why are they becoming so popular for SMEs?
Employee Share Ownership Plans (also known as ESOPs) are a way for private businesses to offer part ownership to employees.
We’re in a climate of skills shortages where conversations around remuneration are shifting — the employer that can offer the best deal will fill the position. Employees, too, are looking to be rewarded for the value they create for the business. ESOPs can be designed as part of a retention strategy, to increase productivity, or as part of a business owner’s exit plan.
Could some of your employees be more invested in your business?
Over the years, we’ve helped instigate positive change in culture and profitability with Employee Share Ownership Plans for private businesses across Australia. They’re an ideal tool to help attract, retain, motivate, and reward talent.
If you’re exploring exit options and are serious about implementing better business systems, we highly recommend attending this free Employee Share Ownership Plan webinar.
In the space of just 60 minutes, you’ll learn:
• The four key Business Development benefits of an ESOP;
• Mechanics of the model and planning requirements;
• Basics of legal and financial documentation;
• Best practice ways to launch the Plan to staff;
• Potential tax concessions for an ESOP; and
• How to use ESOP as a springboard for succession planning.
The experts in Employee Share Ownership Plans
Succession Plus Founder and Chairman, Dr Craig West, completed his doctoral thesis on ‘Using Employee Share Plans for Business Succession’ in Australian SMEs. His holistic approach to ESOP implementation has made him widely recognised as one of the leading experts of Employee Share Ownership Plans in Australia. To read more about the benefits of an ESOP download our Academic Research on ESOP Whitepaper here.
Advantages of an Employee Share Ownership Plan as an owner.
- You can attract and retain high calibre staff by offering a direct stake in the business.
- When you want to move on from your business, an ESOPs can be an effective and efficient way to transfer ownership, compared to sale on the open market
- You may be able to reduce tax obligations by making deductible payments into the plan.
What makes an ESOP attractive to employees?
- Employees given the option of an ESOP can see their efforts at work crystalised into financial returns.
- Work becomes more worthwhile and meaningful when operating as an co-owner and investor in the business.
- Unlike commissions and bonuses, financial boons can be released as a liquid asset when it’s needed or most suitable from a tax standpoint.
How to set up an Employee Share Ownership Plan
Many private companies are surprised that they can offer employees shares without going through an IPO. The process requires a valuation before designing an ESOP that’s attractive to your employees as well as supports your business objectives.
Your Succession Plus Accredited Adviser will work with you to look strategically at operations and business goals, then fact-find with employees to determine the best Employee Share Ownership Plan (ESS) for your business.
Once a transparent and easy-to-understand plan is designed, your adviser will make sure employees are clear on what they are participating in, and the benefits they can expect. That can be through in-person or online training for your team, as well as ongoing maintenance of your ESOP plan and process. Our proven process ensures that the employee share ownership plan won’t become a headache for the business owner or its employees.
For more detail, read the free guide on Employee Share Ownership Plans which you can download below.
Our Employee Share Ownership Plan Benefits
Strategic
Your Succession Plus Accredited Adviser looks strategically at your business, as well as how you run it and the marketplace in which it operates, along with your employees. Considering these factors allows us to maximise the business’ value by providing recommendations on the best Employee Share Owndership Plan for your business.
Thorough
We will examine not only the financial aspects of the business, but also the non-financial/operational issues and the personal goals of the business owner to determine the best Employee Share Ownership Plan for your business.
Effective
We’ll work together to determine the best option for you as an owner, and for your employees then help you implement the Employee Share Ownership Plan within your business. We will ensure key employees are educated on the plan, and provide key information to your business to help deliver results.