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Incentivising your employees



Over the past year or so, employees worldwide (most notably in the United States) have been quitting their jobs in record numbers in a phenomenon that has been termed “the Great Resignation” or “the Big Quit”. There are various studies that have been done surrounding the factors that are the driving force behind this wave, but in our view the problem can be crystallised in one two-word phrase:

Employee Dissatisfaction

So the question then becomes “what can I, as an employer, do to stop my employees from quitting en masse?” Well, below are some ideas that you can implement within your business to not only keep your employees, but also keep them satisfied and smiling. Make no mistake, however, the days of incentivising your employees through things like in-house amenities, catered lunches, bring-your-pet-to-work days are quickly fading into the distance.

Employee Share Option Plans

A fantastic way of ensuring that your employees are invested in the growth and future of your company is to give them a mechanism through which they can earn a stake of ownership. You may be shocked and appalled at the thought of giving out precious equity, but bear the following in mind:

  1. there are many ways of structuring these plans to achieve an outcome that is satisfactory for yourself, your business, and your shareholders;
  2. you don’t need to give your employees actual ownership of the company, or any powers to affect the decision-making process in the company (if you don’t want to); and
  3. these are often structured in the form of granting your employees share options, which are exercisable under certain circumstances (that you can determine).

These plans can also be structured such that if the employee leaves before the options become exercisable (or before they vest in the employee in any other way that you deem appropriate), then the employee forfeits their right to them.

Phantom Share Schemes

Phantom Share Schemes are a little bit more malleable in that they are created in terms of a contractual relationship that is set up between the company and the employee. Often, these Phantom Shares are tied to the value of the company’s shares, but because it’s a contractual relationship the mechanism of valuing those Phantom Shares can be determined by you (or the Board of Directors). Further, the Phantom Shares can also include non-monetary benefits that apply to the employees that participate in the Scheme (like additional leave days, different perks at work, or literally anything else you can think of).

Profit Share

This is an easy one, and another one that can be implemented in any of a hundred different ways. This is a mechanism to create additional remuneration for your employees, and is especially useful for sales-focused staff. They would get a percentage (which you can determine, either as fixed percentages or on a sliding scale) of any sales that they make in respect of which they are the “effective cause” (i.e. they were the driving force behind the sale and successfully managed to convert the sale from a lead to actual revenue).

Whilst this is an easy idea in principle, it can be tricky to implement in practice because there are many different factors to consider, for example how the sliding scale would work, how profit is calculated (i.e. is it based on gross or net profit, and how are those calculated in relation to your specific business), and how and when the employee will be paid out for the profit share that they’ve earned.

Additional Annual Leave

Another easy one to understand, but is tricky in its implementation, is the granting of additional annual leave days. This essentially amounts to paying your employees extra, because they’re on leave but they’re still being remunerated. The structure of this is hyper-important, because you don’t want those additional leave days to be taken into account, for example, in the calculation of unpaid leave upon the termination of the employee’s employment with the company.


The methods of incentivising your employees listed above are all things that you can implement in your company to ensure that your employees stick around and don’t look for that “greener grass” on the other side. At Legalese, we can assist you with setting up any of these structures, while helping you navigate all the potential pitfalls along the way. Our comprehensive process ensures that there are no hidden costs, and at the end of the instruction, you’ll receive a document setting out the appropriate rules, procedures, and participation requirements involved in the employee incentivisation scheme that you select.

– Kyle Freitag

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