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Why have a share plan?

The share ownership culture around the world has developed rapidly over the last two decades. Indeed, such is the range of both executive and all-employee plans that it is now more unusual to come across a company that does not have some form of share-based incentive in operation, than one that does.  Share plans are becoming increasingly important internationally, as groups expand beyond their home country. 

Some of the reasons why a company may wish to establish a share plan include to: 

  • motivate and reward (key or all) employees
  • make the company more attractive to possible recruits
  • encourage employees to stay
  • help employees feel part of a team
  • reinforce a common identity after a major corporate event.

The success of a share plan will be determined by several factors, principally: careful design; effective communication; and commitment. Of course, the more strongly the company performs, the greater the reward for participants, and while a share plan may help improve performance, it needs the foundation of a strong business. 

Academic research shows a strong connection between certain kinds of share plan and improvements in productivity and employee retention.