Share option schemes must be believable, says Ramus
Tue, 15 May 2012
UK workers want greater focus on a meritocratic bonus culture, and are not motivated by coalition-backed employee ownership business models, according to a new poll.
Research by professional recruiter Badenoch & Clark found that over three-quarters (76.2%) of UK workers believe a bonus scheme is a greater incentive to work harder than employee share ownership. Only around one in 15 (6.5%) are keen to have a stake in their organisation.
Bonuses have become an increasingly controversial issue in recent years, with bankers and ‘fat cat’ chief executives of FTSE-100 companies coming in for particular criticism.
Many staffing companies offer bonuses for performance, with fewer offering equity to staff.
Tristan Ramus, chairman of public sector recruiter Eden Brown, says that the issue facing the recruitment industry is that unless backed up by the main shareholder or the board having a track record of creating capital value, programmes offering equity to staff are often not believable.
“It becomes a whole lot more believable if there is a track record of doing it before,” Ramus tells Recruiter.
Ramus adds that within the recruitment industry there is a strong link between an employee’s preference for bonuses or equity and that employee’s role.
Based on a survey of staff at Eden Brown, he says the operational staff were more incentivised by a yearly cash bonus, while the sales people were more motivated by a share option programme.
The Badenoch & Clark survey highlights differences among UK workers in how bonuses should be calculated.
Over two-fifths (44.3%) believe bonuses should be based on an individual’s own or team’s performance alone, however, nearly a third (30.2%) believe they should receive a payout if the company does well, regardless of their own performance.
Another third (35.9%) believe both factors should be considered, while one in 10 (7.6%) also believe bonus payments should only be awarded based on seniority.
Nicola Linkleter, managing director at Badenoch & Clark, says: “In the current economic environment, retaining a committed workforce is an important ingredient for productivity and success.
“However, achieving this takes more than remuneration, and while employees may claim that bonus schemes will encourage them to do their job only a quarter (24.6%) of employees would be happy to have this awarded on their personal performance alone.
“Likewise, without this sense of personal commitment and reward, employee share ownership models will always have limited success.
“To create a connection between employee contribution and outcome employers must therefore first ensure internal communications are established, engaging employees in the organisation’s success and signalling their importance in its future direction.”