Empowering your employees with a sense of ownership provides a great incentive to go the extra mile.

Partial owners of a company have a vested interest not only in their own performance, but in the long-term success of the whole company.

Table of Contents

PrefaceThis mindset of equity goes a long way in combating employee churn, helping you to not only attract top talent – but also to hold onto it. Here are five factors to consider when stock options are on the table.!!

Credits

Reward Performance

Educate Employees

Discuss Valuation

Provide Startup Incentive

Align Your Mission1

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Align Your MissionProviding equity to all employees helps to align everyone with the company’s mission and helps to encourage everyone to think more like active owners instead of passive employees. Making everyone a partial owner can boost morale and inspire longevity and career growth within the company.

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Provide Startup IncentiveStock options are an important part of total compensation for employees who choose to join a startup. Communicate your stock options to potential hires, and also be sure to convey that your company mission is aligned around teamwork, collaboration and mutual success.

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Discuss ValuationIn order for new and existing employees to be able to assess the value related to stock options, it is important to convey key stats related to equity. Keeping every employee in the loop about your company’s financial health is a great way to practice what you’re preaching when it comes to fostering collaboration.

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Educate EmployeesEducation is important so that employees understand all aspects related to stock options, which includes the tax impact related to exercising stock options. Bring in an equity or tax expert to meet with your employees, so they feel confident in knowing the nitty gritty about how vesting works and how to manage their stock options.

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Reward PerformanceStock options are also an incredibly useful tool to help reward high performers. Establishing clear goals that are then rewarded with more stock options when they are achieved is a meaningful way to reward hard work while staying true to your company culture.

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Credits Read Full StoryDavid Stack is an entrepreneur and finance executive based primarily in Boston. He is the CFO of Qstream, a board director at BrandYourself and the former CFO at Hubspot.

Entrepreneur.com