Need to know:
- With job-hopping becoming the norm, share scheme models may have to adapt to provide earlier payments to more immediately engage younger employees.
- Clear and constant communication is needed to ensure staff have bought into the scheme, and in turn, the objectives of the business.
- Share schemes can be an active reflection of the values held by an organisation, a factor becoming increasingly important to younger employees.
The world of work is changing, in no small part driven by the arrival and progression of younger generations in the workforce. Job-hopping, for example, is becoming the norm. In 2020, staff who see it as unlikely that they will stay in a role for more than three or so years are predicted to make up 70% of the global workforce, according to research published by Instant Offices in January 2019.
This does not necessarily signify disloyalty or a lack of motivation, any more than longevity by default being the norm might raise concerns about disengagement. However, it does bring with it new and varied engagement challenges.
Share schemes have long been used to give employees an extra stake in an organisation and drive engagement and productivity, says Jay Foley, managing director, Europe, Middle East and Africa (EMEA), at Computershare.
“They are of great value, [they] represent the ability to engage employees directly and have them participate in their vision for the [organisation], and help with the growth and the objectives and the vision that [business] is putting together.”
The question is: is the younger cohort buying into the idea?
Engage in business success
Even in a world where a large proportion of the workforce is imminently on the move, engaging staff with both short and long-term organisational success is important.
Regardless of age, if employees have a vested interest, their relationship with a business changes, says Ifty Nasir, chief executive officer at equity management platform Vestd: “Giving them a stake for what they’re helping to build is really important. Why should anyone bust a gut if they’ve got nothing in it [for] themselves? It’s very simple. That ‘me as owner’ effect is very tangible and very real.
“There’s also that fundamental belief that if [employers] want [employees] to participate, they need to be able to feel their reward is associated with their success and the value of the business. It’s not just some notion or abstract thing. Why is the value of the business important? It’s important because you have a piece of it.”
The main sticking point for getting the buy-in of younger staff is the timeframe in question with most share schemes, says Sarah Anderson, director at RM2 Partnership: “Share schemes are often quite long term; for some, typically, it might be three or five years before the full benefit of the scheme is delivered. For a younger employee, that might seem an inconceivably long amount of time."
However, there are ways to adjust schemes to make them more flexible and to deliver something earlier for employees. “Quite often, share schemes are just a bit of paper, without any immediate delivery of financial reward," says Anderson. "If [an employer] has the ability to pay [its] employees a small dividend every six months or year, that in itself can be quite an attractive proposition. It doesn’t need to be very much, just a concept of getting some kind of dividend payment regularly.”
Appealing design
Employers can use the design of their share scheme to further encourage staff to participate. For increasing numbers of current and future employees, environmentally and socially responsible actions are highly attractive qualities in an employer; the next generation wants to work for an organisation that reflects its values.
Share schemes can be a useful tool in actively demonstrating that an organisation's sense of social responsibility amounts to more than buzzwords in a brochure. For instance, some schemes will allow employees to give part of their dividends to charity.
“That’s been highly successful, and employees enjoy that they can participate in these plans,” says Foley. “They can participate in the growth of the [organisation], and also contribute to the [organisation’s] charity. It’s easy for an employee to see how to do it, they get the benefit of it, and they see the contributions going in on a periodic basis.”
Communicating for engagement
Employees, regardless of their demographics, should receive regular communication and reminders about a scheme, in order to guarantee understanding and ongoing interest. This can be especially pertinent to younger generations, and should be used to create an appealing dialogue around tailored elements such as charitable donations and early payouts.
The key to effective communication about share schemes is keeping the story simple, but repeating it often, says Anderson.
Typically, younger generations bring with them valuable technological and digital skills and understanding. The other side of this coin, however, is that many have grown up steeped in a world in which communication is constant, immediate and, at its worst, deafening. Employers must adapt to grab the individual's attention quickly.
Many share scheme providers have tackled this issue head on with the use of apps and videos to give direct, digital access to share schemes, while also pushing promotions and communications in a forum familiar to younger staff.
“We are incorporating those tools into the material that gets provided to employees to engage in the plan,” says Foley. “Because there’s so much going on, there’s so much out there competing for the attention of our employees, with all these different forms of media [we] have to stand out and get their attention quickly."
As Anderson concludes: “If [employers] don’t communicate properly, they can spend a lot of money putting a share scheme in place, and end up having to run it for a small number of people so it’s not cost-efficient.
"The argument is that if [employees] get involved in share schemes, especially if they’re being involved regularly and making a regular investment, they become much more engaged with the [organisation] as a whole.”
