Financial profit sharing may be an important instrument to attract or retain employees. They often feel more committed if they participate financially in their organization, whatever form this takes. Scale-ups often ask us to help them set up a participation scheme to let employees share in the profits if their business is successful. But longer-established companies also often involve their employees financially, to let them feel a bit like owners. In addition, it is something with which companies may distinguish themselves from their competitors in the labour market.
Participation schemes come in sizes and shapes. Each has its own objectives. This must be taken into account when a specific scheme is chosen. Collective profit sharing, for example, lets employees literally share in the company’s profits. It is a model often chosen by well-established organizations to increase motivation and the feeling of being in it together. Then there is gainsharing, in which specific targets are set that need to be achieved together. This may really provide motivation and especially direction. Share option schemes do this too. They allow employees to buy shares in the company. It is a model often seen in scale-ups. Still another option is certificates, i.e. shares without voting rights.
All of these arrangements have advantages and disadvantages. They must fit in with the whole of the organization’s compensation and benefits, as well as with the employer’s objectives for the scheme. Besides, setting up a participation scheme is not just a matter of finding the best deal fiscally. For they also influence employees’ behaviour.
BexerHamstra’s consultants take all of this into account: the motivation and energy engendered by such schemes, the direction they can provide for the business, and what is wise fiscally and legally.
