By increasing employee engagement, ESPPs boost overall corporate performance.
ESPPs are broad-based programs that provide companies with a cost-effective way to extend ownership opportunities to their employees. While that sounds great on paper, the real benefits of ESPPs only come when they are correctly optimized and tailored to your company’s specific situation. If your ESPP is not set up optimally, it can actually produce very specific negative effects, like less employee engagement and a diminished culture of ownership.
In return for this expense, the primary benefit of ESPPs is the flexibility to pick and choose exactly what works for your company’s specific situation. So if you’re going to invest in an ESPP, it only makes sense to design it and optimize it in such a way that your company gets the most out of it.
To get a better understanding of how ESPPs can influence everything from employee engagement to attracting new talent, let’s take a closer look at the effects of both an un-optimized, and optimized ESPP:
What Happens When Your ESPP Isn’t Optimized?
When your ESPP isn’t functioning optimally, you risk hampering employee participation. The plan must be designed in such a way that employees feel there is enough economic benefit for them to participate, and to tie up so much capital in a single stock. Employees tend to be risk-averse, so the ESPP must build in adequate rewards. Then, the value of the program must be communicated to them effectively and regularly through multiple touch points. Optimizing the ESPP and then building awareness will help boost participation.
Otherwise, if the ESPP is not optimized, you risk less employee engagement, productivity, and ownership culture. Over time, this can also lead to higher turnover.
What Happens When Your ESPP Is Optimized?
An optimized ESPP provides an avenue for employees to participate and benefit from a culture of ownership. Engaged employees with “skin in the game” are more likely to come up with innovative ideas for saving money, generating new products, and more. Your top talent will begin to think and act as business owners (because they are).
Employees who participate in an ESPP:
- Work longer hours
- Are absent less frequently
- Express greater job satisfaction
By increasing employee engagement, ESPPs boost overall corporate performance. They also help you retain and attract talent. A 401K and medical insurance are “table stakes” to most job candidates, but only 40% of all public companies offer an ESPP (Source: Computershare Share Plan Survey). Offering an optimized ESPP helps your company stand out and be more attractive to top performers.
Ready for an ESPP Optimized for Your Business?
If you don’t have an ESPP, reach out to us for help designing and implementing one that’s custom-crafted and optimized for your specific business goals. If you already have an ESPP and aren’t seeing the engagement you’d like, reach out to us for help with optimizing it to garner more employee participation.