When employees make huge sacrifices and burn the midnight oil trying to make their companies successful, a good salary is not enough incentive.
A stake in the company is.
Saudi Arabia could be leading the region in this, as there has been a realization that it’s not such a bad idea – both locally and globally.
The Saudi example
Irish fintech firm Global Shares has boosted its investment in the region and opened an office in Saudi’s capital, Riyadh.
The company manages employee share plans of some of the world’s biggest companies and chose the Riyadh office as the hub region’s service team.
The company’s new Managing Director of the Middle East, Abdulhadi Alherz said: “The arrival of Global Shares, a global fintech leader in the employee ownership sector, is great news for Saudi and the wider region. Saudi has a large, strong economy with a population of 33.7 million (youth ratio of over 2/3rd) and a GDP of $790 billion, where 32% of the population are expats, which will help deliver long-term incentive plans.”
Originating in Silicon Valley in California, employee ownership and equity compensation is used as a tool for attracting, retaining, and engaging employees. It encourages productivity and helps align goals.
John Meehan, Global Shares Business Development Director, commented: “The Middle East is a region of huge strategic importance to Global Shares as more and more companies recognize the importance of equity-based compensation.”
As well as Saudi, Global Shares is focusing on Kuwait, Bahrain, Oman, Qatar, UAE, Jordan, Tunisia & Egypt.
Its products are suitable for both emerging, early-stage, or large permanently private as well as publicly listed companies.
Hiring and retaining employees via incentives
Many businesses facing cashflow disruption and an uncertain future made the difficult decision to freeze hiring but as businesses stabilize and adjust, governments across the world are announcing incentives for those companies that help recruit young people into the workforce.
Beyond temporary financial incentives, there are multiple reasons why businesses should be actively seeking out young talent right now. Employees entering the workforce for the first time bring enthusiasm and fresh energy to a business while freeing up vital capacity for more experienced team members. Most importantly, they help businesses foster novel ideas and new technological capabilities.
Younger employees allow a business to take advantage of the latest tools and technologies and fast-track the pace of change to match evolving customer needs.
While the job market remains challenging, attracting the best young talent is still tricky. To be competitive, HR departments need to look at what matters the most to the newest generation entering the workforce.
The most successful, forward-thinking firms recognize that factors other than a solid monthly remuneration are key drivers for young professionals.
Benefit packages, no matter how unique they are in the marketplace, won’t tick all the boxes for every young employee.
HR teams should curate a tailored career plan with incentives and conditions that encourage them to put their best foot forward.
Employee ownership schemes look to be the leading incentive to achieve this in the long term.
Employee ownership: A global theme
What’s the new year’s outlook for employee stock ownership plans (ESOPs)? Forbes suggests these companies should fare better than other businesses, both in their operating and financial results as well as in merger and acquisition activity.
Diane Swonk, Grant Thornton’s astute chief economist, thinks speed bumps in vaccine distribution could delay achieving herd immunity until year-end.
This means employment will contract again producing reduced payrolls, bankruptcies, and business consolidations which could weaken investment and job generation.
Against this scenario, the outlook looks better for ESOPs and businesses with employee-ownership plans. Based on one significant new study, ESOPs outperformed non-employee-owned companies during the pandemic and are more optimistic generally that they will return at some point to normal business activity.
The study concluded that the majority ESOP firms drastically outperformed other firms at retaining jobs by a 4 to1 ratio, and maintained standard hours and salaries at significantly higher rates than other firms, with only 27% of ESOPs cut pay vs. 57% at other firms.
Bill Roark, Co-Founder & CEO, Torch Technologies, said:
“I’ve got a lot of people who would work to the wee hours of the night trying to make the company successful, and when the company succeeds, I don’t think it’s right for me to take all the proceeds and go home with them. People care about the success of the company because they have a stake in the outcome.”
For his part, Ken Baker, CEO, New Age Industries said: “I wanted a high-performance company, and I knew that if I didn’t give ownership, I wouldn’t get high performance. I think there’s just a different mindset of an owner versus just an employee.”