FINANCIAL PARTICIPATION
Offering employees a share of the action
A recent issue of IRS Employment Review looks at the operation of employee share schemes and finds that employers typically use a "mix and match" approach combining equity and cash bonuses.
The five-page study by IRS looks at a range of bonus and financial participation schemes -- including savings-related share option schemes, share incentive plans and profit-share arrangements. Among the 27 organisations IRS heard from, just under half (12 employers) currently operate at least one type of scheme for the majority of their staff. Half of these 12 operate more than one scheme.
Pros and cons
IRS asked employers about the advantages and disadvantages of profit-share and bonus schemes. The most widely-cited advantage is the linking of company performance with individual financial gain -- mentioned by five of the 12 companies.
But respondents did point out a number of disadvantages. A batch of companies felt scheme administration could be time-consuming. Others emphasised that the link between an individual's contribution and company performance can be "tenuous".
Want to know more?
Title: "Sharing the spoils: profit-share and bonus schemes", IRS Employment Review 784/Pay and Benefits, 19 September 2003.
Availability: Contact the IRS customer services, tel: 020 8662 2000. For more information about IRS Employment Review visit www.irsemploymentreview.com
Posted 1 October 2003