Towards a Total Rewards Management System
February 12, 2025
This is a well-established fact that communication is very important in today’s competitive world and surroundings. Before we understand what are non-verbal cues or prompts, we need to know what verbal and non-verbal mode of communication is. Verbal Communication: As we know that when we express our thoughts and feelings through words, it is called […]
Let us go through the following case study. John of Organization A was not only good in marketing organization’s products but also maintaining records, maintaining relationship with clients and so on. Peter on the other hand of Organization B could only sell products and nothing more than that. Organization A did not suffer much when […]
Trainings help employees enhance their capabilities and acquire new learnings, skills and knowledge. Trainings help employees come up with unique and innovative ideas, meet targets within the desired time frame and make them efficient resources for the organization. One needs to understand that lot of time, money and energy go in designing training programs for […]
Lateral career moves are common in the corporate world and there are some specific strategies that one can follow when making a mid career move. First, one needs to remember that changing jobs a few years into the career is not like getting the first job and hence, the expectations as well as the ambitions […]
The Need for Industry Academia Collaborations Industry and Academia cannot exist independently of each other. Just as the education system prepares students for their future careers, it also has to collaborate closely with industry to try to understand the needs of the industry so that they can prepare the students accordingly. If there is no […]
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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