HOW YOU CAN KEEP YOUR EMPLOYEES COMMITTED EVEN AFTER LOWER SALARY DUE TO COVID-19?

During this Covid-19 crisis many Companies are struggling with regular payment of salary. Almost 95% Companies are facing the impact of COVID-19. Almost 75% MSME don’t have work as they are dependent on OEMs for order. Some of them have work but don’t have labour force to get the work done.

All in all, due to this situation, one major organ of the Company is feeling depressed i.e. Employees. Employees are struggling due to deducted salary and uncertainty about their future. Because of this majority of the people are suffering from reduced concentration and work efficiency. The Core zeal of work is lost and they are unsure of their commitment and future of the Company.

On contrary employers don’t want to lose good employees and the energy of entire team, support and commitment is highly needed in this stressful time. Unless company manage to keep its employees stick with it and ensure strong bond, there are huge chances that the company will find it difficult to b ounce back once things start getting normal.

So, what can be solution for this issue?  One thing is for sure that the company will not be able to bounce back unless it is strongly supported by all its pillars and one of the things that can achieve this is ESOP.

 

 

 “USING OF ESOP AS TOOL FOR EMPLOYEE ENGAGEMENT AFTER LOWER SALARY DUE TO COVID-19”

 ESOP is a system under which the employees of a company are generally given the right to acquire the shares of the company for which they are working. In some of the cases, the foreign holding/subsidiary company also grants such options to the employees of the Indian subsidiary/ holding company. Under such a scheme, the employees are granted some rights, called as stock options, to get the shares of the company for free or at a concessional rate, at a predetermined price or the price to be determined on the prefixed method, as compared to the potential market rate.

There are various reasons for which the employees of a company are given such stock options. The phenomena of stock options are more prevalent in start-up companies which cannot afford to pay huge salaries to its employees but are willing to share the future prosperity of the company. In such cases the employees are given the stock options as part of the compensation package. Moreover, in some cases, the employee is given such stock options which he can exercise in future date/s, in order to ensure long-term commitment of the employee. So apart from rewarding the employees with monetary gains, ESOP also help create a sense of belonging and ownership amongst the employees.

In present situation of COVID – 19 ESOP can be used for convey the feeling from Company to employees that, “we care for you. We are here to stay together and grow together. The Company is strong to core and this situation too will pass and we will emerge as stronger, wise and rich.”

ESOP will boost the engagement and sense of belongingness among employees and they will have feeling to being more pro-active rather being reactive. They will build the sense of ownership and will work in more innovative way which otherwise was not thought of. Secondly, the benefit of encashing ESOP will be much more high in coming time, as most of the Companies are having struggled cash flows in last 2 years and due to make in India or Vocal for Local many of this domestic Companies have opportunity to rise from ashes and make become a strong replacement for Chinese products / companies.

 

CS SUSHANT KULKARNI

FCS, DADRS, DCL, LL.M. (International Commercial Laws)

Mobile No: 9763663156

Email ID: Sushant.kulkarni@arkscs.com