February 10, 2021
HR Policy India Update: Employee Stock Ownership Plans, which were once used as a tool to tie senior management to business objectives and make their pay competitive, are now being given out to employees across the board by some start-ups, particularly in sectors that saw their business and revenue hit new benchmarks despite the pandemic. Such employees include back office, administration, production, and sales staff with stock options as a gesture of sharing their success, to keep people motivated and retain talent. Liquidity events or cash-out opportunities that have created value for ESOPs in real cash terms over the last few years are prompting an increasing number of startups to use it as a tool to attract and retain talent. These companies have followed an approach that removed variable pay based on individual performance, and instead used ESOPs to create incentives for everyone to be invested in long term organizational growth. The idea being to enable every employee in the organization to participate in wealth generation that they helped create.