If ever there was a time for organisations to reap the benefits of the distributed workforce and a widened talent pool, it is now. Managing a globally distributed company and accessing global talent brings about its own set of challenges when it comes to the employee experience you can provide.
The BTN was recently delighted to partner again with Papaya Global for a VIP roundtable that brought together leading HR and Finance professionals to engage in an open & interactive conversation around creating a truly global compensation plan. How much personalization do we need to install within our benefits and compensation plans? How do we ensure there is fairness across geolocations? How can companies with a global footprint use EOR’s to facilitate equity distribution?
The conversation was led by the incredible Carlene Perry (Head of Global Equity at Papaya Global) and Eynat Guez (Co-founder, CEO at Papaya Global), which was an open and interactive conversation bringing about the following takeaways:
Why offer Equity?
Carlene opened up the discussion as to why companies want to offer equity to their employees. Firstly, for many companies, equity is a long-term incentive. By having equity, you’re limiting your amounts payable in salaries. For example, if you do not have a large salary package, then equity is a good alternative as you are not paying that amount upfront. Equity is a great enabler for employee retention. Secondly, if you look at the historical trends of IPOs, for example, Uber, equity is something that for the current generation of workers is impossible to replace as a form of benefit and long-term incentive.
However, equity comes with risk. What is a stock option? What is an RSU? We must educate our employees as to why they should participate in the stock option. Until this is done thoroughly, it is hard for workers to see the value up until that time. ESOPs can be great for startups but may need to shift towards RSU. The retention offer of RSU with no strike price has a double trigger where it has a liquidity event. This helps with tax as RSUs will always have a value. Your employees will appreciate you taking the time and consideration for their ongoing monetary gains.
Awareness of globalization and international issues
We must be aware that equity is treated differently in each country. In many cases, you may find organisations that offer equity without doing any diligence as to what the implications might be to employees based in that country. Most of the time these corrections can be extremely costly. For example, China has separate rules and information about local taxation. It is important to understand what the allegations are in other countries.
How do we build out a global offering with a blanket approach? Or do we need to create siloed offerings? We can easily pick out the elements of a reward package and make them global, such as having birthdays off but fundamentally, when it comes to the benefits that an employee might appreciate more, you cannot change the fact that healthcare costs far more in the US than it does in the UK. There are some choices you can make as an organisation to help with these issues but as organisations, we must realize in certain situations we need to put more focus on elements of an employee’s total package in specific situations. For example, looking at how companies handle recognition and what programs can be put in place to assist with these issues all around the world.
Educate about Equity
The value of equity in Europe vs the US is sometimes incomparable. We push equity but don’t talk about the ‘value’ of equity. Equity is tricky. Most employees do not understand how equity can be converted into real funds and therefore do not notice the benefit. For example, if you are granted equity, you have a variety of benefits such as tax benefits. Equity can be a life-changing event, however, employees are not appreciating this enough. Therefore, companies need to invest in education.
There are many ways organisations can great a great reward package:
- Allow for cultural differences and how you recognize people.
- Become flexible and offer different packages.
- Be true to your values as a company in what you do and how you do it.
- Making it authentic with a company to ensure it’s connected to the companies values and purpose to make it special.
- Time and equal credit. Companies need to have more focus on building into reward. Time is the most important priority.
Despite equity coming with risk, equity can bring many advantages and for many companies is a long-term incentive.
About Papaya Global
Papaya Global offers a total people, payroll, and payment management solution supporting all types of global employment (payroll, EoR, and contractors) in over 160 countries. The automated, cloud-based SaaS platform provides a unified solution, from onboarding to ongoing management and cross-border payments. The platform integrates with all existing HRIS management tools, provides real-time business intelligence, and eliminates errors. It gathers all employee information into one place, creating a highly visible system for tracking payroll spending. The platform ensures GDPR and SOC compliance to maintain the highest standard of security.
