Top 5 challenges with Employee Share Option Plan (ESOP) Implementation and how to conquer them

Top 5 challenges with Employee Share Option Plan (ESOP) Implementation and how to conquer them

Employee Share Option Plans or Employee Stock Ownership Plans (ESOP) are gaining popularity in today’s market. The driving force behind this is a competition for top talent and the need to incentivise and or boost productivity among our workforce, not to mention incentivise and reward staff for staying with your company long term. In addition to this the traditional methods of employing one-off short-term financial rewards have been under scrutiny in the past decade (financial crisis 2008 anyone?) as they have been proven to promote short term & high-risk decision-making behavioral tendencies.

So, Employee Share Plans seems like a win-win for companies and as a result it’s not surprising that companies continue to find alternative avenues under the Employee Engagement framework to hire and retain staff in the longer term and help promote specific behavioral traits in line with company culture through the implementation of an Employee Share Plan.

Whilst we have seen an increased uptake of this emerging trend, many still struggle to optimise and reap the intended benefits of an Employee Share Option Plan program largely due to concerns over several perceived challenges.

#1 - Mobile participants due to the emergence of a Global Workforce

With the world becoming ever more globalized it’s not surprising that our workforce has followed the trend. This globalization of the workforce has posed challenges for companies deploying global Employee Share Option Plans for a variety of reasons. Currently, global participants need to go through tedious administration processes with HR to set up their Central Depository (CDP) account, receive physical offer letters and have near zero visibility on their equity plan information in real time.

As a result, we have seen some global participants go as far as taking leave to travel to the respective equity issuing country to open their share depository accounts with the local exchanges to enable transmission of shares in their name. This process is not only tedious it’s completely impractical and unnecessary with the right partner.

#2 – Manual Administration and Management of Employee Share Option Plans

Believe it or not, in this digital age most companies still manage their Employee Share Option Plans on a spreadsheet. Whilst spreadsheets are known to be robust and “excel” (*pun intended) in capturing static information for operational purposes they have a drastic impact on ease and efficiency of implementation and administration of Employee Share Option Plans.

User expectations are shifting drastically, we all demand “relevant and insightful” access to information “anytime and anywhere” at our convenience. In answer to this, it is imperative to find a dynamic solution to capture, process and report information in real-time to enable participant visibility and reach without creating a manual resource drain.

#3 – Misalignment on Perception of Employee Share Value

Whilst many companies and employees have seen the benefit of adopting an Employee Share Plan, uptake across ASEAN is slower as employees continue to value cash reward as a variable incentive plan.

The current behaviors from a cultural standpoint are more aligned towards short term instant gratification due to a lack of understanding of how equity is a form of reward and recognition for their efforts. The “cash is king” mentality still reigns supreme, and we all know the risks associated with this mindset.

#4 – Lack of Internal Resources & Capability to Manage Strategic Imperative

This is potentially the Achilles heel of successful implementation and administration of Employee Share Option Plans, a mindset that this is a box ticking exercise and no different to periodic transaction activities like payroll.

This can be due to any number of factors, a lack of cultural acceptance within the organisation of equity plans or it’s seen as a cumbersome task. Typical management of Employee Share Option Plans on a spreadsheet can be extremely tedious and, in the more complex cases, a full-time job for 1 full time equivalent. There is a wealth of time-consuming administrative processes that need to happen; the offer management process, vesting management, record keeping of participant information, liaising with participants on plan mechanism, leaver management, regulatory reporting, the list goes on. Many HR Practitioners don’t realise there is an alternative solution to the manual labour currently associated with administrating equity plans.

#5 – Traditional Record Keeping Solution

Most solutions in the marketplace today are designed for functional purposes only, they provide static data and are table driven. This is not surprising given most were designed with the sole aim of record keeping and generating reports for Financial Reporting, Payroll Tax Computation & Reporting.

What is surprising is that there is a global push in nearly every industry sector to focus on user experience. Especially in relation to employee engagement strategies, employees just demand more today, for Share Plans participants need to have real-time information access, share price movement, a one-stop integrated trading platform, and historical information for individual income tax declaration purposes. We live in a digital era and any solution that doesn’t embrace this is considered obsolete very quickly.

Looking For A Trusted Employee Share Plan Firm In Singapore?

We have designed an all-rounded encompassing solution comprising of an experienced Share Plan team of practitioners and a digital solution to help you manage your strategic initiative.

01 Learn more about EmployeeServe - our Employee Plan Services platform!

Contact us today to find out more about our class-leading solution.

Or you can also learn more about our Employee Share Option Plan (ESOP) services here.

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5 Reasons Why Your Business Needs Accounting Services

5 Reasons Why Your Business Needs Accounting Services

Accounting is one of the essential functions your business requires for robust financial management. However, many business owners still opt to handle their accounts in-house. This not only takes up their valuable time but also heightens the risk of compliance issues that could cost their business in the long run. 30% of Singapore start-ups fail within the first three years, and poor financial management is one of the principal causes.

A professional accountant goes beyond just bookkeeping. They help facilitate the financial operations and planning of your company, allowing for better management and cash flow.

While looking to outsource your accounting in Singapore, ensure that your accounting company has a team of Certified Chartered Accountants, experienced in serving businesses of your niche and size, and can provide a dedicated account manager to service your account.

In this article, we will take you through the top 5 reasons why you require accounting services (and why it is best to outsource it!).

Reason 1 – Enjoy Cost & Time Savings

Hiring an experienced full-time accountant could set you back not only thousands of dollars a month but also substantial training time and costs to get them up to speed.

You can eliminate these concerns by engaging a professional accounting firm. By paying a monthly service fee, you gain access to the expertise of a team of accountants proficient in various areas of accounting, be it tax management or bookkeeping. This allows you to save hiring costs as well as recruitment training time. Moreover, you will be able to avoid costly errors or employee turnover.

Reason 2 - Fosters Better Business Growth

When your accounting is done right, you will have a clearer picture of your company’s financial health. This allows you to make informed decisions to support your business growth. You will also gain greater insight into the feasibility of critical decisions. These include deciding if the time could be ripe for the opening of another local or overseas branch or maybe to hire a new employee.

A credible accounting firm helps you understand your receivables and collections and paints a clear picture of your company’s cash flow and business seasonality. When you engage a regional accounting firm, you gain access to their advisory services and market analysts.

Through sound accounting practices, you can begin to understand your company’s performance and start to make strategically sound decisions, setting your business up for success.

Reason 3 – Staying Compliant with Statutory Requirements & Regulations

Running a business itself is time-consuming and costly. The last thing you want to happen is to run afoul with the Singapore tax authority (IRAS) and be hit by a potential audit or even worse, suffer financial penalties.

As your company grows, organising the paperwork for tax reporting becomes increasingly complex and tedious as it encompasses many things including payroll and Profit & Loss Statement.

A professional accounting firm is well-versed in tax laws and procedures, helping you avoid potential pitfalls. They can quickly spot any irregularities and ensure your accounting records are faultless, allowing you to stay compliant and enjoy peace of mind.

Reason 4 - Maximise Your Savings & Deductions

While staying compliant is of critical importance, outsourcing to a professional accounting service in Singapore allows you to enjoy tax breaks and exemptions that you might have been unaware of.

To claim these tax rebates and business expense deductions, you must meet a set of qualifying conditions. Many nuances are involved in obtaining these deductions successfully and legally.

Moreover, if you conduct business overseas, there are numerous tax treaties that you may be unfamiliar with. This could lead to double taxation, causing you to pay more taxes than you need to.

A professional accounting firm can advise you on all the tax benefits you are entitled to along with helping you obtain them so that you minimise costs and keep profits high.

Reason 5 - Establish an Organised & Automated Accounting Flow

As we move towards a technological age, it is important that your accounting records are stored in a digital format so that they are well organised and easily retrieved for reference or financial analysis.

A professional accounting service can set up a secure platform with advanced software for your company. Other aspects such as payroll and claims submission can also be integrated into the platform so that the company’s confidential information and records are kept electronically in a secure location.

They can also create digital analytical reports which help you identify the most profitable areas of your business to drive growth.

Looking For A Trusted Accounting Firm In Singapore?

At BoardRoom, we are a regional accounting firm in Singapore and are experts in helping companies, from corporations to fast-growing SMEs, allowing them to focus on what matters – growing their business.

From handling tax accounting to managing statutory compliance reporting for companies across Asia-Pacific, we help companies with our full suite of accounting services, allowing them to stay compliant, maximise their tax benefits and stay organised for better decision making.

Contact us today and empower your organisation with greater freedom through our accounting solutions.

Or you can also learn more about our accounting solutions here.

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