Keeping employees motivated and incentivized so they want to stay is a prerequisite for any business culture. It also has significant cost and productivity benefits.
Staff turnover can cost British businesses over £30,000 per member of staff. Without the right motivations, productivity levels naturally begin to sink. Yet while staff recruitment and retention can often feel like a game of carrot and stick, there is a more human way to approach it. Rewarding your team with equity in your business is a smart, cost effective and incredibly powerful. It’s untapped resource that many startups and SMEs are only now beginning to understand.
Retain and reward
In the days of Mad Men a juicy cheque and well-worded flattery might have done the trick to keep an employee happy, but these days that’s a slippery slope. Money isn’t always the strongest guarantee of good work and increasing bonuses is a dangerous precedent to set. In the changing culture of modern business, people are more driven by the feeling they’re part of something bigger. The feeling that their work and effort has value.
Share the risk, share the success
Imagine you’re part of a group of people tasked with building a raft. If you’ve got a place on that raft along with everyone else, you’ll be much more motivated to make sure you build the best raft that ever there was, than if you were staying on land. The same principle applies to rewarding your team with equity. When they become shareholders in your business they know they’re not just an employee, but rather a valued and important part of the business who has a vested interest in its success.
Founders of walking startup, Go Jauntly, Hana and Steven, have been able to use equity distribution to cherry-pick the best people for their team. They knew they were the best because these experts were keen to be rewarded with shares in the business. This demonstrated to Hana and Steven that these new team members totally got the idea behind Go Jauntly and were happy to stick by them for the long term.
“They’re just as invested in the business as we are. It’s a fantastic human motivator.”
That’s the why, here’s the how
There are a variety of options of how to reward equity to your team. EMI schemes, employee-share schemes and employee-owned businesses are just some of the terms being shared in this space. The most important thing is to decide what the best approach is for your business and your team.
Step one: Decide who you want to reward with shares. You might want to reward team members who helped build your initial product. Or perhaps you want to set up a share scheme for your employees. Crafted Crate, a beer subscription service has found rewarding their customers with shares a successful move.
Step two: Next, decide why. By giving shares to those initial team members you’re giving them a real stake in the business, ensuring your working relationship continues. For employees you might want to set terms such as completing a certain project. In the Crafted Crate example, founder Chris Drummond gave shares to customers who signed up for a 12 month paid subscription. This meant he could build his customer base with loyal advocates.
Step three: Manage the process. Distributing equity doesn’t have to be complicated, costly or time consuming if you’ve got a clear idea of what you want to do and why. If you’re unsure about your share structure or the best process to follow then there is plenty of guidance online.
So there it is. An explanation of the untapped human motivator your business is sitting on. Rewarding your team with shares is an easy and powerful way to bring your team closer to your business.