Towards a Total Rewards Management System
February 12, 2025
The previous article on personality briefly discussed how organizations and the HRD function determine the fit between the employee and his or her role. This article looks at this topic in depth with specific reference to the role of the HRD function and the managers in this alignment. For starters, whenever an employee is hired, […]
What are Ageism and Youngism and Why They Matter to America Inc? Of late, there has been much discussion about how the Ageing Boomers are retiring, or on the verge of retirement, while younger Gen Zers are entering the post pandemic workforce, while the Millennials are settling into managerial positions. These workforce trends are indicative […]
The HR Scorecard Relies on Data The HR Scorecard is a data and metrics-driven tool that relies heavily on the collection of such data and metrics. Thus, it can be said that the HR Scorecard thrives on data and metrics. While data can be collected manually which is a time-consuming procedure, it can also be […]
Introduction In recent years, organizations in all sectors have been aggressively working towards a concept called diversity of workforce. When you see a job posting that talks about equal opportunity, you might be wondering what it is all about. To put it simply, diversity in employment means that the employer is actively pursuing what can […]
Introduction It has been extensively identified that knowledge is an important aspect for an economy to develop. We are seeing a lot of transformation rapidly happening in our society. Every day we are seeing that we are becoming more and more dependent on knowledge. If this is the case with our societies, the scenario is […]
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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