Morgan Stanley at Work issued equity compensation-related results from its fifth annual State of the Workplace Financial Benefits Study, exploring how US employees and HR executives at public and private companies view equity compensation.
The data suggest that in a complex economic environment, employees are turning toward equity compensation as a key motivator and financial ballast to help them align their financial interests with that of their companies. And while HR leaders agree equity remains a key tool for talent management strategies, gaps between HR and employee views indicate important opportunities for improving equity plan education and engagement.
Key findings from the study include:
- Despite volatility, HR leaders recognize long-term value in equity: Amid uncertain markets, HR execs still agree the most important advantage of equity compensation for employees lies in helping them meet long-term investing goals, such as retirement.
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- Private company liquidity still in focus amid uncertainty: 67% of employees and 88% of HR leaders at private companies say the prospect of a future liquidity event or IPO is important to them, indicating that even as private companies move cautiously amid an uncertain economic backdrop there is a need for liquidity solutions and planning.
- Employees increasingly see equity as a key motivator and wealth generator: Almost half (48%) of employees completely or strongly agree that equity is the most effective way to keep them motivated and engaged in their roles. They also say the top three biggest benefits of equity compensation are that it are that it offers them a stake in their company’s success (28%), helps them meet long-term investing goals such as retirement (23%) and provides an additional source of income (22%).
“Equity compensation is understood as a strategic necessity not just for executives but across all levels of the organization, aligning employee and company interests even in volatile times,” said Craig Rubino, Head of Corporate Relationship Management and Engagement at Morgan Stanley at Work. “As awareness and interest in equity plans grow, it’s crucial that we continue to enhance education, support and access so companies can leverage this tool to boost both employee satisfaction and organizational performance.”
Yet data highlights ongoing opportunities to improve equity program engagement and efficacy:
- Employees want equity compensation—and guidance to maximize its benefits: More than 4 in 5 (84%) employees say they would be interested in receiving equity compensation. And those that do receive equity want more support: Over a third (34%) say that help maximizing equity compensation or employee stock purchase plans as part of their financial benefits is essential to meeting their financial goals—and nearly half of HR leaders (49%) agree.
- HR leaders more likely than employees to say equity education programs are effective: 36% of employees and 43% of HR leaders rate their company’s equity participant education program as very effective, indicating that while equity education is making a difference, there is an ongoing need to help employees better understand and integrate their equity into a comprehensive financial approach. In fact, 20% of HR leaders have heard employees express worry or concern about not knowing how to fully utilize equity compensation or employee stock purchase plans.
“In today’s market uncertainty, we’re seeing that employees increasingly see equity compensation as a powerful force in helping them align their financial interests with the long-term success of their companies,” said Kate Winget, Chief Revenue Officer of Morgan Stanley at Work. “Cutting through the current market noise, both employees and HR leaders recognize the profound potential of equity to help unlock long-term personal and organizational strategic goals.”
Source: BusinessWire
