Towards a Total Rewards Management System
February 12, 2025
How Hiring Managers and Organizations Detect Fake Resumes and Spot Lies The recruitment and selection process is an important aspect of any organization’s overall Human Resources (HR) and for that matter, even org wide policies. Indeed, considering the fact that recruitment and selection often determines whether the right person for the right job has been […]
What is Six Degrees of Networking and How it Explains the Power of Interconnection We are told repeatedly that networking is the key to success in the corporate world and how many you know, who you know, and how you know them matters a lot. Indeed, right from the business schools who make a virtue […]
What Are Quiet Quitting and Quiet Hiring and Why They Matter For Corporate America Quiet Quitting was the rage for most of 2022. As the post pandemic workforce battled stress and burnout and became lethargic, many employees resorted to what is known as Quiet Quitting, where they were unwilling to go beyond and over what […]
Employer branding is not an illusion. It’s of absolute importance for organizations eyeing on the best industry talent, aiming to drive innovation and aspiring to remain at the forefront of the competition. Let us understand its importance by taking a look at the initiatives that top companies from across the world have taken to establish […]
Informational training methods are basically used to teach facts and figures and for developing a change in attitude. There is a one way communication between the trainer and the trainee that involves the transfer of information without many deliberations. New policies, programs, code of conduct are transferred using informational training methods. Lectures, audio visuals, self […]
Employee Stock Option Plans (ESOP’s) are one of the most popular ways in which modern startup companies reward their early employees. In Silicon Valley, many companies such as Google and Facebook have used Employee Stock Option Plans (ESOP’s) to lure the best talent from the market. Since these companies have become very successful, there are several multi-millionaires in the Silicon Valley area thanks to these Employee Stock Option Plans (ESOP’s).
However, this does not mean that Employee Stock Option Plans (ESOP’s) always work. In some cases, the objectives of both the employer as well as the employee are met. On the other hand, in many cases, Employee Stock Option Plans (ESOP’s) create a lot of problems. In this article, we will have a closer look at the downside of these ESOP’s. We will have a look at the downside from the point of view of the company as well as the employees.
Employee Stock Option Plans (ESOP’s) are always marketed as being financial instruments which bring democracy into companies. Many companies have reported high growth led by motivated employees and democratic decision-making process after Employee Stock Option Plans (ESOP’s) were introduced. Also, ESOP’s allow better financial management. The employees can defer smaller present payoffs for bigger payoffs in the future. Also, there are considerable tax advantages to using Employee Stock Option Plans (ESOP’s). However, there are many disadvantages as well. Some of them have been listed below.
The anecdotal stories of Employee Stock Option Plans (ESOP’s) multi-millionaires are more the exception than the norm. Employees also face several disadvantages when they accept a large chunk of their compensation in the form of Employee Stock Option Plans (ESOP’s). Some of them have been listed below.
To sum it up, Employee Stock Option Plans (ESOP’s) are not as beneficial as they are claimed to be. They too have a lot of drawbacks which both parties need to consider before they decide to use the Employee Stock Option Plans (ESOP’s) as a method of compensating workers.
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