Who hasn’t heard of companies like Apple and Google? If you didn’t know, Apple began in a garage with two friends sparking innovation, while Google started as a college project by two students.
Today, these companies have revolutionised the world.
But here is the thing: you might be the next one in line. The thought that you have jotted down in your diary could be the next great disruptive innovation.
However, with big dreams come big questions: You ain’t gonna be able to do it alone. You’re gonna need a team. And a good one at that. How do you get them when larger companies can offer higher salaries?
How do you convince others that your idea is just as powerful as the established giants?
Where will you find the resources to recruit the best people?
What should you learn first?
Don’t worry—every successful business owner has faced these fears. When Apple and Google first started out, even their founders didn’t have all the answers. What distinguished them was their readiness to face the unknown, to take that first step, and to trust the journey. Every successful venture begins humbly, but with the right people, passion, and perseverance, your business can grow into something greater than you ever imagined.
One strategy that has helped countless startups become industry leaders is offering early employees something more than just a paycheck—ownership in the company. This isn’t about partnership agreements; it’s about Employee Stock Ownership Plans, or what we commonly call as ESOPs.
Why ESOPs? When employees own a piece of the company, they’re more invested in its success. They work harder, innovate more, and take pride in building something they have a stake in. This sense of ownership can help small companies compete with larger ones for top talent—because it’s not just about salary; it’s about being part of something meaningful.
So, how do you use ESOPs as a tool to attract the best talent?
The answer is simple—– By offering them the chance to be part of something significant before it becomes big.
Just like those garage startups that grew into household names, you can build a great team—by giving people a sense of ownership and a shared vision. ESOPs are not just useful financial tools but they motivate employees through hard work, dedication, and devotion of the individuals who will contribute to the success of your business.
Why Does Ownership Matter?
Now, you might ask: why would someone join your company just because of ESOPs?
The answer is simple—when employees have a stake in the company, they work harder.
For instance, let’s look at a real-life example: Mukund Kulashekaran, a former top executive at Zomato, shared that during his tenure, the ESOPs he received appreciated by 12-14 times. He admitted that it took time to understand the value of ESOPs, but he realised that “just salary is not going to create wealth.” Mukund encouraged employees to view ESOPs with a long-term mindset, saying, “You have to believe there will be appreciation.”
This example shows us a key point: when employees have a stake in the company’s success through ESOPs, they are more motivated to help the company grow. They become co-owners and stay invested in the company’s future, making them more likely to work harder and stay committed, even during challenging times.
Going public allowed Zomato employees to see the value of their shares increase exponentially, and their hard work paid off in a big way. Who wouldn’t want that?
Let’s face it—many companies offer similar wages and benefits. But how many can say they give employees the opportunity to be co-owners? Very few!
Practical application of using ESOPs in recruitment practices:
- Advertise ESOPs on Job Listing
Make sure you highlight ESOPs in the job description; what are they? What are their benefits? You might say something like, “Join us as part-owners through our Employee Stock Ownership Plan.” (yeah – we intentionally call it that, rather than the boring Employee Stock Option Plan). This single line can capture attention.
- Use Employee Stories
Nothing connects better with potential employees rather than real-life experience.! So, share some stories of current employees on how ESOPs have impacted them. You can also record short video recordings of the employees talking about their experience and how the ESOPs have changed their lives. Real stories automatically attract candidates who would like to join your team.
- Teach during the interview
Explain ESOPs while interviewing candidates, covering the process, the advantages, and vesting schedules. It’s important that they understand how these benefits can create value for them.
- Addressing concerns upfront
If candidates are uncertain about ESOPs, it’s essential to be open and transparent about how they work. Address both the risks and the rewards honestly. The more upfront you are, the more confident candidates will feel in your offering. Transparency builds trust and reduces hesitation.
- Provide financial education
Take one step further by providing financial education. This can be in the form of workshops or access to financial advisors that could make employees realise the long-term implications of the ESOP. Show them you care enough about their future.
Retention and Culture
ESOPs are more than a recruitment tool; they are also a powerful retention tool. When employees feel they are part-owners of a company, they have more motivation to remain in the company and devote themselves to building it. Additionally, ESOPs help create a great company culture. It brings in an ownership mentality that makes all employees work towards common goals and fosters teamwork and innovation. Such an environment attracts talent and ensures that these talents stick around.
Conclusion
Utilise ESOPs to increase your chances of attracting and retaining talent in the corporate world. Beyond these benefits, ESOPs create a responsive and energetic workforce.
So, are you ready to build a stronger team through ESOPs?
It’s important to emphasise that investing in employees and then making them employees owners is key to fostering a healthy culture. It is not just about the filling of positions; it is about creating a workforce that brings value and grows alongside the company.
Looking to implement an ESOP and have questions about how to structure it effectively? Book a call with us using this link for FREE guidance on this.
