Study shows employee share schemes are great for business

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Date: 6 July 2021

Happy employees

A new study into employee share schemes has found that they significantly boost company growth, make recruitment easier and improve employee retention.

Research conducted as part of a government consultation on the value of its Enterprise Management Incentive (EMI) scheme has found that the vast majority of firms using an EMI employee share scheme are delighted with the results.

Research conducted by YouGov and 3Gem for share scheme platform Vestd has contributed to the consultation; it found that nearly all businesses with an EMI share scheme have seen a significant uptick in their retention, recruitment and growth.

Vestd surveyed over 5,000 UK business leaders, managers and employees and found that:

  • 93% of firms that are using an EMI say that it helps with recruitment;
  • 95% say that it helps with employee retention;
  • 93% agree that it helps with company growth and development.

"EMI was introduced to help SMEs compete for the best talent and it also provides a tax-efficient way for businesses to share equity with their staff," said Ifty Nasir, founder and ceo of Vestd. "However, the scheme hadn't been assessed in over a decade, prompting the government to launch a review earlier this year, to find out whether the scheme was meeting its aims."

The latest findings suggest that EMIs can far exceed business expectations. Researchers asked 2,500 firms that are considering an employee share scheme about their objectives and found that nearly half were looking to improve retention, one in four wanted to improve their recruitment and just under a fifth were seeking to enhance company growth.

The results from those already using an employee share scheme are "far higher" said Nasir. "It's clear from the data and from the anecdotal evidence that whenever a company introduces EMI, they see results that outstrip even their most ambitious hopes for what the scheme can do for them. This data constitutes an overwhelming endorsement of EMI. During this time of recovery from COVID-19, enhancing the existing scheme could be one of the most powerful things that the government could do to support small businesses and start-ups across the UK."

Vestd is conducting a campaign to boost awareness of EMIs and to urge the government to expand the criteria of the scheme so that more companies can participate.

"We'd urge company leaders to take a look," said Nasir. "As we bounce back from COVID, we need to get this message out. There couldn't be more evidence that this is a powerful driver of growth for businesses. And what's even more powerful than that is that share schemes can create a more equitable economy in which everybody has a seat at the table. This is big vision stuff, but by making these changes now, the UK can change its business landscape for the better, forever."

Written by Rachel Miller.

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