Why Clearly Communicating Equity to Employees Can Make or Break Your Retention Rates

Equity can play a major role when it comes to overall earnings, yet a whopping 95% of employees don’t understand what their equity package entails. Without knowing the true value of their total compensation, equity, and future growth, employees may be more likely to leave in an attempt to find greener pastures. 

Continue reading to discover why you should be clearly communicating equity to employees from day one, and learn how it can help improve your retention rates. 

Help Employees Understand Their Ownership in the Company 

These days, employees aren’t willing to be on the sidelines and settle for less. A key advantage of communicating equity is that they can have a clear understanding of their ownership and stake in the company. This needs to be done from the moment a candidate receives their offer letter, and employees should be reminded that they can access their equity information regularly. 

93% of workers say they would remain at a company longer if it invested in their career – what better way to invest in someone’s career than providing them with the details of their partial ownership in your company? 

Highlight Your Company’s Potential Growth 

It’s simply not enough to only highlight what employees’ current equity packages are worth. How can you show them the potential growth in their equity if your company grows? Luckily, there are tools to help employees visualize their equity valuation over time and paint a clearer picture. 

There’s no doubt that providing employees with an understanding of their equity in the short-term and long-term pays off. The cost of replacing just one employee is between 90% and 200% of their annual salary! If your team hasn’t already, implementing a thorough retention plan to ensure higher retention rates and make sure performers remain at your company is crucial. 

Conceptualize What is Being Left Behind if Employees Walk Away 

Oftentimes, employees are laser-focused on their salary alone, yet almost half, or 40%, of compensation is non-cash. This includes factors such as equity, benefits, perks, and more. By better communicating the value of each of these components, your HR team can ensure employees understand that their total compensation package covers so much more than their base salary. 

Given that equity can change and grow over time, not reminding your employees about their equity’s value can be detrimental to everyone involved. Companies can be at a higher risk of losing top talent, and employees who decide to walk away could unknowingly be leaving behind thousands, if not hundreds of thousands of dollars in equity on the table. 

Uphold Your Company’s Unique Culture and Values

Communicating equity to employees can also play a part in upholding and reiterating your company’s unique mission, vision, and culture. 

Consider the below values that clearly communicating equity can uphold: 

  • An open and honest communication approach 
  • A culture of growth that promotes forward thinking 
  • Working together toward one common goal 
  • The importance of individual ownership in the company 

Unsurprisingly, 62% of workers believe it is very important for their work to align with their values, passions and interests – relating these values to their equity in the company can be a great way to boost both morale and retention. 

Interested in getting started? Customers have clearly communicated over $2 billion of compensation to candidates and employees using Welcome. Check out our case study here to see what people have to say about how Total Rewards has helped them reimagine their compensation practices.

Don’t forget to sign up for free to try accessing free real-time compensation data or book a demo to get a firsthand look at how you can enhance the way you communicate equity with the employees!

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