Companies also want to ensure that employees continue to feel valued
Many of us have been humbled by the selfless work of healthcare employees, grocery store and other essential workers such as delivery drivers during the COVID-19 pandemic.
A lot of businesses in the retail and logistics sectors are actively looking at ways to help frontline and hourly paid staff, many of whom are experiencing difficult working conditions, including those preparing to distribute the coronavirus vaccine, and a greater impact on their finances as a result of the pandemic.
Companies also want to ensure that employees continue to feel valued and appreciated during this very difficult period.
Read more: Tesla's leaked handbook sheds light on open-door policy
Wage increases, cash bonuses and additional paid time off can provide short-term motivation and help retain employees during tough times, but many companies are also looking for ways to reduce spending.
Companies can design their share plan to target essential workers, who are more likely to receive hourly wage rates or have a lower wage base. Firms can also allocate additional shares (also known as bonus or free shares) to employees.
Read more: Should bosses have to pay back their bonuses?
If your company is considering how best to reward frontline workers through employee shares, Computershare recommends first assessing the following five factors:
1: Understand the best type of reward schemes for your employee base (and make the most of existing share purchase plans)
Companies can choose the following plan structures: non-matching contributions, matching workers’ contributions and making the money immediately available to the employee (Employee Share Purchase Plans or Employees Profit Sharing Plans) or at a later date (Employees Profit Sharing Plans or Employee Benefit Plans). They can also choose a plan that delays employer matches, as well as plans with or without a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) components.
Most share purchase plans, except those with a RRSP aspect, typically enable employees to purchase shares after income tax.
2: Use internal benchmarking and research pay and equity among competitors
Consider analyzing internal pay or equity distribution which can help ensure employees receive correct levels of compensation. Researching competitors’ approaches can also help companies better understand the right compensation model for them.
3: Be aware of the financial impact of any changes
Any modelling or planning should anticipate the effect of equity awards or bonuses on the business. It may be easier and more efficient to approve additional shares or a new share plan than incentive programs that require market-value purchasing of shares.
4: Understand the mechanisms for distributing awards
Companies should ensure that their plan design meets employees’ expectations on annual grant timings. Delays and access issues can erode employee trust, particularly during difficult times, and undo the goodwill the plan aims to create.
5: Be sensitive to perceptions over fairness
Unveiling comparatively lucrative packages for senior executives at the same time as announcing changes to share purchase plans for other employees can damage employee relations. Full value equity awards, which level out the differences between executives and employees, can help create a culture of broad-based share ownership.
Sheila Frierson is President, Plan Managers North America, at global employee share plan provider Computershare.
Computershare is a long-standing supporter of established industry research on the impact for companies that provide wider access to equity inside their organisations.
Benefits include more engaged, conscientious, inventive and loyal employees.
Globally, Computershare has supported over 90 client award wins in recognition of its innovative work delivering leading share plans to international companies and has first-hand experience implementing a global culture for 12,000 employees.
The organisation operates share plans from 17 countries, servicing 170 nations, transacting in 135 currencies and across 24 exchanges.
