The Power of Effective Employee Incentive Schemes

The approach of a business should therefore centre on crafting employee remuneration packages that serve as powerful catalysts for engagement and commitment. These packages should be designed to reward and motivate the workforce while also aligning with the interests of shareholders.

When designing a successful strategy for incentivising employees, the following aspects should be kept in mind:

1. Competitive Compensation: Fair compensation is the bedrock of employee satisfaction. The goal is to empower employees to thrive within their local communities and adapt to evolving economic circumstances.
2. Long-term incentives: Innovative long-term incentive programs resonate with both shareholders and employees. By harmonising their interests, a synergy is created that drives sustained performance and fosters loyalty.
3. Performance linked-pay: The results-driven approach ties individual success to organisational goals. As employees strive for excellence, they contribute to collective achievements, reinforcing the shared vision of the Company.
4. Retention-Focused Incentives: Investing in employee growth and well-being pays dividends in loyalty and commitment.

In Malta, share-based remuneration packages have gained prominence as a strategic tool for employee motivation and retention. These packages take the form of share options or share awards, where specific performance targets and goals unlock the opportunity for employees to acquire company shares at a favourable price. By participating in the scheme, employees stand to reap the benefits of company profits once they become shareholders.

Alternatively, the company might consider providing a performance-based remuneration to its employees through a scheme that grants a portion of the company’s profits, as determined by the shareholders, without entailing any formal ownership rights in the company.

Another option could be reserving a pool of shares, not just as financial instruments, but as a means to motivate and reward dedicated employees. These shares could be allocated for the purpose of granting certain rights to employees in the company as decided by the shareholders, while the shares remain registered under the Company’s name.

A trust setup could also be considered. In this arrangement, the employees’ interests could be protected more independently.

At Grant Thornton, our experts are dedicated to helping you craft tailored remuneration strategies that align with your business goals and shareholder interests. Whether you’re exploring competitive compensation models, long-term incentives, or innovative share-based remuneration packages, we’re here to guide you every step of the way. Connect with our team at Grant Thornton to discover how we can help you propel your business forward with strategies that motivate and retain your most valuable asset, your employees.