With the current tightness in the labour market, we are all seeking new ways to attract talented employees, retain them, and motivate them optimally. Does this also apply to you? Then employee participation might be the solution! In this article, you will learn all about it.
What is employee participation?
Employee participation, also known as employee financial participation (EFP), is the business model in which employees actively share in the success of the company. This can be achieved through a bonus scheme or by making employees actual co-owners, by issuing (certificates on) shares. As the company grows, so does its value, and through employee participation, employees grow with it. This contributes to a high-performing team and enables you to reward employees for long-term goals in the short term.
What forms of employee participation are there?
There are many ways to structure employee participation. The four most commonly used methods are briefly summarized below. For a more detailed explanation, you can read all the associated articles.
Trust Office Foundation (STAK)
Establishing a trust office foundation (STAK) is the most rigid way to implement employee participation. By issuing certificates on shares, your employees will actually become co-owners of the company. Setting up the trust office foundation requires a notary once. The notary can create more than a billion freely transferable certificates, eliminating the need for further notary involvement.
Economic Ownership Rights (EOR)
By transferring economic ownership rights (EOR), you share the economic rights to profit or business valuation with your employees. This means employees are not truly co-owners, only economically. No trust office foundation is required for this, making it possible without the intervention of a notary. This makes it all very straightforward for if you want to get started quickly!
Employee Stock Option Plan (stock options)
Providing stock options for your employees gives them the right to buy shares in the company at a predetermined price and under certain conditions in the future. This can work perfectly to motivate employees!
Stock Appreciation Rights (SARs)
With SARs your employees will benefit from the increase in the value of a fixed number of shares over a certain period. This enables employees to partake in the company's growth. The payout is in cash, therefore no notary or specialist is needed. Very easy to set up!
What are the benefits of employee participation?
It's no secret that the success of a company largely depends on the engagement and dedication of its employees. Employees who feel ownership of the company are often more engaged and motivated to contribute to its success. This is why employee participation, where employees have the opportunity to become owners of the company, is becoming increasingly popular.
1) Increased Engagement and Motivation
Employees who own a part of the company have a personal interest in its success. This ensures that employees are more engaged and motivated to contribute to the company's success.
2) Higher Productivity
Employees who feel ownership of the company are more responsible for their work and are often more motivated to improve their performance. This leads to higher productivity and better results for the company.
3) Improved Employee Retention
Employees who own a part of the company are less likely to leave because they have a personal interest in its success. This can help retain talented employees and reduce the costs of recruitment and training.
4) Improved Financial Results
Research has shown that companies with employee participation often achieve better financial results than those without. This is because employees who own the company are often more engaged in its success and are willing to work harder to achieve financial goals. If you want to read more about an improved cash flow, you might like this blog article.
5) Ability to Attract Talent
Companies with employee participation can be more attractive to talented employees because they have the opportunity to become owners of the company. This can help attract talent and build a stronger and more diverse team.
Any more questions?
Despite the numerous benefits that employee participation brings to a company, it may initially seem challenging to get started. To address this, Share Council has developed an advanced platform to simplify this process significantly. Would you like to discover the possibilities this offers for your company? Consider participating in our webinar, where all your questions are warmly welcomed!