The UK has an employee engagement problem, argues Yoko Spirig.
Gallup’s Global Workplace Report for 2022 found that just 9 percent of the UK workforce is currently feeling engaged and enthusiastic about their work, putting the country in 33rd place out of 38 in Europe.
Terms like ‘quiet quitting’ and ‘bare-minimum Monday’ are becoming more commonplace, with many employees feeling increasingly disenchanted with their employer and/or their work.
But, what if there was a way employers could change how employees see their jobs? A tool which enables them to see their work as an investment that could have a real long-term upside for their own personal finances?
In a nutshell, the answer is equity. When you give people the opportunity to own a piece of the company they work for, people stop treating the work they do every day as a means to an end. Instead, they start to understand their work as an investment that can offer a range of lasting benefits.
Equity can be a force that helps the entire company balance short-term ambitions with long-term purpose.
Inside the employee disengagement crisis
Feeling engaged is evidently good for employees. It usually means they are healthier, happier, more fulfilled and more motivated. It is also good for business, with research showing that higher engagement goes hand in hand with higher performance as well as customer satisfaction, productivity, innovation, staff retention and efficiency.
However, there is no doubt that the UK has an employee engagement problem. Employee engagement levels in the UK are one of the worst in Europe with fewer than one in 10 UK employees feeling enthusiastic about their job.
A poll of 2,000 white collar professionals found the UK could be facing a ‘disengagement crisis’ with just one in three employees feeling engaged and motivated by their work. As a result, many of those surveyed opted to simply ‘get the work done’, without thinking about their longer-term ambitions and career paths.
Using equity to motivate the team
Employees with an ownership stake think about their jobs differently than employees who do not have shares or share options. In fact, we found in our 2023 State of Equity and Ownership report that 84 percent of employees believe equity has a positive impact on motivation.
Employees with equity can see a direct correlation between the work they put into the company’s value, and the financial reward they could receive when the value of their equity stake increases.
They take an interest in big-picture strategy rather than focusing solely on their own roles. And their ‘skin in the game’ means they are more prepared to challenge plans they disagree with. By rewarding employees with equity, you invite them to share the responsibility that comes with having a financial stake in a company.
Your equity scheme is also a critical incentive to motivate your employees to commit to your company for the long term.
The standard vesting period for employee share options is four years, meaning that in order to claim 100 percent of their share options, an employee has to stay for at least four years. Studies have found that on average, millennials stay in a job for somewhere between two and three years, meaning that implementing a standard vesting plan could help improve retention.
A fair and transparent equity scheme can be one factor that shifts the balance in your favour when a team member is weighing up their current role versus a new option.
Attracting top talent
Failing to invest in employee equity can also hurt your company when you’re trying to hire.
Especially in the technology sector, the perception of employee equity has transformed from a ‘nice to have’ into an expected part of a compensation package. Although this has been the case for some time in the US, it is only in recent years that this transformation has started to take place in Europe.
Companies that want to attract top talent need to offer competitive equity packages. If it is missing from your offer, people will notice, and hiring A-players will only get harder.
Employee equity is both a responsibility and a reward
By now we know that people do not come to startups for pool tables and free beer. Many startup employees are motivated by the opportunity to contribute to an exciting new idea. Equity schemes reward and harness that spirit by giving employees a stake in the company that goes beyond their day jobs.
Equity gives people an extra reason to choose you over another company; to do their best work, innovate, and focus on long-term rewards, even in a tough economic cycle. Equity schemes also demonstrate to employees that their value and hard work is recognized. Giving away ownership means more people taking ownership, and that is how great companies are built.
Yoko Spirig is co-founder and CEO of Ledgy.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.