Two SMART ways to reward your employees, your business, and yourself

September 30, 2021

Two SMART ways to reward your employees, your business, and yourself

3 Minute Read

Looking to improve employee retention? Start by looking at employee profit sharing plans and employee share ownership plans.

In today’s labour market, business leaders across all industries are faced with a relentless challenge: employee retention. Keeping key talent is foundational to sustaining success and organizations are looking for new approaches to solve this growing obstacle.

To tackle this problem, consider these two powerful solutions:

  • Employee profit-sharing plans (EPSPs), and
  • Employee share ownership plans (ESOPs).

Both EPSPs and ESOPs deliver benefits for the employees while bolstering the business, leading to long-term benefits for leaders like you.

Let’s start by analyzing profit sharing plans.

Employee profit sharing plans

The fundamental benefit of profit-sharing plans is straight-forward: tying team member efforts to key results. When a team member works hard and delivers, the business will benefit, and the employee gets to share in the profits.

When people feel like they’re a part of something bigger, with a personal connection to the business, they want to stay there. They understand the goals of the organization and how they fit into the bigger picture, giving them a sense of personal fulfillment – and greater compensation.

Improved employee retention and satisfaction are not the only benefits. To implement an EPSP, a business needs to clearly identify goals and metrics for evaluating employees. This means your organization has to focus and clarify what you are working towards and what success looks like. Many businesses have an idea about their goals but they may not have taken the step to formalize those goals with data. When done right, EPSPs have the potential to add rocket fuel to big business plans.

Employee share ownership plans

Another way to increase retention is to give key employees tangible ownership in the organization they work for. By slowly introducing employees to ownership, you create a stronger tie to the business and employees are much less likely to leave an organization they have ownership in. This specific strategy has worked really well for companies who have to recruit and retain their key talent fighting against large, formal companies.

The other benefit to introducing share ownership plans is laying the foundation for your eventual transition. Exiting a business is a process, not an event, and creating an ESOP can help you identify the next set of owners well before you want to leave the organization.

Typically this structure is used works well with the existing owners maintain ownership of their existing company value, tie this value to their retirement planning, yet introduce new owners to share in future growth.

Learn more

EPSPs and ESOPs can deliver tremendous value to your business and solve some of the top issues you’re facing. To learn more about how these plans could work for your organization, contact Eben Louw, CPA, CA, Partner, at 604.870.7413 or [email protected]



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