Twitter CEO Jack Dorsey’s recent announcement on giving 1 percent of the company to his employees’ equity pool signals a rising trend among tech startups. Building stock options into compensation packages can be a win-win, because it aligns employees with management and the board of directors.
Empowering your employees with a sense of ownership provides a great incentive to go the extra mile. Partial owners of a company have a vested interest not only in their own performance, but in the long-term success of the whole company. This mindset goes a long way in combating employee churn, helping you to not only attract top talent — but also to hold onto it. Here are five factors to consider when stock options are on the table.
1. Align your mission.
Providing equity to all employees helps to align everyone with the company’s mission and helps to encourage everyone to think more like active owners instead of passive employees. If employees are focused not only on a paycheck but also the future success of your startup, they’ll be more productive and focused on enhancing the company.
Making everyone a partial owner can boost morale and inspire longevity and career growth within the company. It also fosters a collaborative culture. Because the value of stock options depend less on any one person’s efforts and more on leveraging the entire team to succeed, teamwork is in everyone’s best interest.
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