How equity helps attract, motivate and retain staff

In today’s competitive job market, ambitious, high-growth companies are always searching for impactful ways to attract, motivate, and retain top talent. Offering equity, through ESOPs or an EMI options scheme for example, has become a powerful tool in achieving these goals. Employees are placing greater emphasis on equity as part of their compensation package, seeing it as a key factor in their decision to join and stay with a company. Recent data from our State of Equity 2025 report highlights just how significant employee equity can be in shaping hiring trends, employee motivation, and long-term retention.

Why should companies consider offering equity?

Companies looking to scale efficiently often use equity as a tool to attract skilled talent without breaking the bank on salary. It is hard for smaller growth-stage companies to compete with large established companies that offer higher salaries. Therefore, equity becomes one of the ways that smaller companies can attract talent. This is commonly seen in development roles, whereby salaries are generally higher given the in-demand nature of those particular skills.

Employee equity plans are also a powerful tool when it comes to aligning employees with the success of the company. For teams to be engaged in the long-term success of the company, equity will enable them to directly benefit from the overall success of the business. This will also have a significant impact on employee retention. Companies can customise vesting to match their goals; an example of this is four-year vesting with a one-year cliff. But, companies can link vesting to company value, revenue or other success metrics to ensure alignment.

Lastly, modern businesses have used equity to enhance their employer brand or reputation in the market. As equity becomes more common for employees, offering generous equity packages stands out in the job market, further enhancing the chances of attracting top talent. 

Are candidates more likely to apply for roles that offer equity? 

In short, yes. Our State of Equity 2025 report surveyed over 2500 tech workers in private businesses across 10 markets – and the results were overwhelmingly in favour of jobs that offer equity. 50% of employees stated that they were more likely to apply for a role if equity was on offer. But staggeringly, 25% of respondents said they would only apply for roles if equity was included as part of the remuneration package. This data clearly shows the desire that employees have for equity, meaning that if you are hunting for top talent, equity is a vital tool for talent and recruitment teams. 

Do equity plans impact motivation and retention?

Yes. Our survey revealed that 79% of employees said that they believe equity has a positive impact on motivation. And, 65% of respondents stated they would be more likely to remain with their current employer for longer if offered additional equity. These data points suggest that equity not only attracts talent but also helps motivate employees daily, alongside retaining them for longer. It is worth considering refresher grants for top performers and key employee groups to ensure you retain the most valuable talent in your business.

The gender gap in equity ownership levels

It is crucial to recognise and address any issues within the availability and distribution of equity between male and female staff. Our survey revealed that at the Junior Staff level, there was a massive 21 percentage point deficit when comparing equity ownership for women against the levels that men reported. The reason for this gap is not absolutely clear but female participation in STEM subjects could be a contributing factor. Due to equity and salaries being higher in engineering and tech-based roles, which are sought after in high growth companies. 

Senior leadership roles generally have the highest understanding and equity ownership level where often equity remuneration is linked to company performance. And, in these positions the equity ownership gap is not statistically significant. However, despite the gap not being prevalent at higher levels of seniority; women in junior positions and or looking to start work will be disincentivised by the gap in equity ownership. Actions should be taken to encourage the participation of women in STEM subjects and roles in future to address the lack of female representation in these roles. Alongside the recruitment initiatives, whereby those categorised as ‘Junior Staff’ are offered full-time roles and training in areas that will increase opportunities for increased equity rewards.

A summary of the overall benefits of equity

Equity awards provide companies with the following benefits:

• Increased employee motivation on a daily basis
• Increased likelihood of retaining key staff
• More likely to attract top talent through the recruitment process

Equity as part of total compensation, is becoming increasingly common and can no longer be an afterthought for companies with ambitious growth plans. You can read more about the valuable insights in this blog and find additional data in our State of Equity 2025 report. 

How to implement equity reward plans at scale

Ledgy provides a solution to help businesses modernise equity at scale. Our equity management platform enables both ambitious private companies and large public companies, take control of their equity and share plans without the pain of significant share plan administration. With intuitive employee dashboards, automation and customisability, Ledgy will enable you to make equity work more efficiently for you and your company.

Book a demo with one of our friendly experts and they can explore how Ledgy can help you modernise your equity management.

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