How Do Employee Stock Options (ESOPs) Help Retain Talent in Knowledge-Driven Industries?

Employees Stock Options (ESOPs)

This is the latest trend in the industry. It is a very important tool in knowledge-intensive industries like Information Technology, etc. Here, the greatest assets are the employees and their knowledge. The organization loses out if an employee were to leave. So, in order to retain employees, they are offered direct participation in the form of company shares. This is known as Employee Stock Options (ESOPs).

Human Resource Accounting

This is a concept where employees and their knowledge are treated as assets of the company, and a value is attributed to them. This value is also reflected in the balance sheets of the company.

Hi,

I like to keep up with the current information. There are various types of ESOPs which differ from organization to organization. There is a website that provides information about employee stock options: http://www.nceo.org/pubs/esopcommittee.html.

With regards,
Jayavel.k

ESOP may be successful at a point in time, but it was not considered a great strategy for retention and motivation for lower-level or lower executive level where the salary they receive is relatively low. It may be a good option for top management. Therefore, ESOP is often referred to as a fab by many articles.

Human resource accounting is a new concept aimed at emphasizing that employees are a company's greatest strength.

I am familiar with Employee Stock Option Plans (ESOP) insofar as a client used it as a proposal during labor contract negotiations. It was designed to be an incentive and compensation where the company was struggling with cash flow and needed the employees to be more innovative and efficient.

Unfortunately, the employees ("new owners") did not see the benefit of ownership and continued in their old ways. After two (2) years, the company went bankrupt. ESOPs used to be a "hot button" in the States, but I don't hear much about them anymore.