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Flexible time off, catered lunches, casual dress code and office-owned arcade games can cultivate a fun work environment. But one perk stands alone in its attempt to generate a real, business-wide sense of shared success. By offering equity, startups and tech companies provide a monetary way of giving ownership of the business to the employees who help grow it.
We connected with three Austin teams who offer company equity to see why it matters to them.
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uShip launched its shipping marketplace in 2003. Since its inception, the company has grown from a startup to a staple in the freight industry with more than 200 employees. uShip's senior manager of talent acquisition, Angie Meier, and Dean Jutilla, VP of corporate communications, told us how uShip's equity model has positively affected employee engagement and retention rates.
What does it mean to offer equity as a perk?
It means providing your employees an opportunity to have a vested interest, both literally and figuratively, in the success and advancement of the company, ultimately some sort of an exit or liquidity event.
What are the advantages for the employees?
It’s an option to invest, and it can help to foster dedication and long-term focus on the health of the company. It’s motivating to know that after you’re vested, you can literally own a piece of the company and monetarily benefit from that ownership in the future.
What are the advantages for the company in doing so?
Advantages range from cultural — creating a spirit of ownership and camaraderie — to practical — being a tool of retention. It also comes into play when employees need to make decisions on a day to day basis. They need to think like a shareholder when they ask, “Is this decision in the best interest of the company?”
What advice do you have for early stage startups that are flirting with the idea of offering equity?
It’s important to find the right balance between compensation and equity. Where possible, use equity as a “closer” where you have gaps between what’s budgeted and the need to secure desired talent, especially in development and engineering.
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ClearDATA develops secure, HIPPA-compliant management platforms and security tools for over 330,000 health care professionals. Founded in 2011, the company offers stock options for every member who joins the team. Jessica Reeves, ClearDATA's director of HR, shared with us why they do it and why it's important.
What does it mean to offer equity as an employee benefit?
ClearDATA offers stock options to every community member that joins the team, regardless of level or title. It is important to us that everyone owns part of the business so that we all think and act in a way that this is "our" business. As owners, we're working together to make a difference in healthcare while we build a long-term, successful and great place to work.
What are the advantages of offering equity as a perk for the employee?
The employees are truly owners of the company and get to share in the success of the company in a meaningful way. It’s a win/win for the company and the employees. It is also a way to generate, over time, higher compensation overall than just cash and bonus compensation, assuming the company is successful.
What are the advantages for the company in doing so?
It enables us to all work toward the same vision and goal resulting in increased productivity and alignment across the company.
What advice do you have for early stage startups that are flirting with the idea of offering equity?
Education is key when offering equity. Make sure your employees and candidates understand the benefits and huge upside of equity or else they will not see the value in it! Also, ensure communication regarding company financial goals and targets is transparent so employees can see where the business stands and how it relates to their equity potential.
Founded in 2010,
uStudio helps users and developers create, distribute, manage and measure videos. The team's CFO Sharon Kincl discussed the importance of offering a healthy equity package in order to increase productivity and employee self-worth.
What does it mean to offer equity as an employee benefit?
It means that the company values the employee as an owner and looks to the employee to proactively participate in building value for customers which, in turn, builds value for owners.
What are the advantages of offering equity as a perk for the employee?
Employees are incentivized to behave in a way that increases the value of the company on a holistic level.
What are the advantages for the company in doing so?
Employee-owners tend to approach their jobs in a more creative and focused manner, thereby creating value for themselves as well as other owners.
What advice do you have for early stage startups that are flirting with the idea of offering equity?
Don't be stingy with equity incentives for employees. Employees are the most valuable asset the company has and can do the most to increase value for your customers and investors.
Images provided by featured companies and Shutterstock.
