The warning comes from the Chartered Institute of Development
(CIPD). Its recent survey found that around two fifths of employers
offer all-employee share plans.
"Employee share plans can help to make employees think more like
an organisation's owner," said CIPD 'Reward Adviser' Charles
Cotton. "This leads to greater attention being given to the overall
success of an organisation and not just their personal
positions."
But he warned that organisations that do not also invest time
and resource in the implementation and communication of a plan run
the risk of losing out on these benefits. "This can be
counter-productive and lead to low morale and recruitment and
turnover problems," he said.
CIPD says the plans need ongoing communication and maintenance
to meet organisational objectives, motivate staff and benefit the
business.
"Employers should consider them an integral part of the total
reward package, working with staff and line managers to implement a
package that meet the needs of the business and employees," said
Cotton. "It is essential to align share plans with the wider
business objectives and with the organisation's culture if they are
to succeed."
CIPD has published a new book, Employee share plans:
supporting business performance, to help employers implement
effective share plans in the context of the tax and regulatory
environment, as well as new accounting standards.
New standards for share-based payments came into force last
year. Organisations now need to recognise the cost of providing
share incentives as an expense. CIPD's own research indicates that
most organisations appear to be reviewing their employee share plan
design (either broad-based or executive) rather than cancelling
them.
Sara Cohen, the report's author, said, "The new accounting
standards have made a positive impact by encouraging some
organisations to look more closely at the return on investment
rather than simply selecting a plan because it has no cost. This
will encourage employers to investigate different arrangements and
then develop a plan that meets the needs of the business. The
report covers a number of issues that employers must consider when
implementing the standard and communicating share plans in general.
"
Rory Cray, a Senior Associate with Pinsent Masons' Share Plans
team, said: "The new study appears to back our own experience:
share plans have never gone away. Within organisations, they can be
an effective staff communication vehicle. Scrutiny by shareholders
is also giving companies new opportunities for engagement and
consultation, which can result in companies obtaining shareholders'
backing for share plans that are bespoke and a 'fit' for that
company, rather than having a 'one size fits all' plan."
