Now, it’s more important than ever to make sure that your best employees are engaged and motivated towards achieving business goals. Although the pressure caused by the talent shortage has eased up a touch, the hunt for top talent is still on. The startup world is no longer swimming in cash, so you need your “triple A” players to show up, be invested, and love their job.

One way to accomplish goal alignment and a greater sense of belonging is to offer equity schemes. These give employees the option to buy company shares at a predetermined price (the “strike price”) in the future. As equity schemes are powerful tools for employee retention and motivation, it makes strategic sense for them to be owned by the People department. In reality, though, we’ve noticed that People teams tend to push the topic towards the Finance team’s agenda.

So, why does this occur, and how can businesses empower and encourage their People teams to take ownership of the process?

Why do People teams shift the onus to Finance?

Beyond the basics, financial education is (unfortunately) not part of most people’s upbringings, even more so for those interested in complex human interactions who are later drawn towards the People career path. As a result, People-people may not feel comfortable or confident dealing with the complexities of an equity scheme - vesting schedules, cliff and exercise periods, and tax implications are enough to challenge anyone!

Whilst designing, administering, and operating an equity scheme is a great example of a cross-department task with contributions from the Legal, Finance, and People teams, we’re still certain that the process should ultimately be owned by the People department.

We also asked Sara Brioschi, former Head of People at Ledgy, for an opinion:

“As (a former) Head of People, I firmly believe that it is crucial for the People department to own the equity topic within a company. While the Finance department certainly plays an important role in managing financial aspects of equity, People is uniquely positioned to handle the human elements that come with equity ownership.”

A big motivation towards implementing an employee equity scheme is to trigger a sense of ownership across the whole team, not just the founders. In turn, this increases employee happiness, engagement, and performance, which is why investors are happy (willing 😅) to sacrifice some of their own equity to create a pool for employee options.

With a strong sense of ownership, a deeper and more meaningful relationship is formed between the employee and their employer, resulting in a net positive for both parties. Employees with equity options can rightfully feel that they are working and creating value for themselves.

And bingo! We’ve arrived at the hot, boiling magma of the question. As designing and managing equity schemes builds and nurtures a deeper relationship than cash, bonuses, and even benefits can bring, we think it should be owned by the internal relationships department - the People people! (Or HR/HC as it was known among the tribes that hunted the mammoth to extinction).

In addition, Sara added:

“Equity is a powerful tool for attracting and retaining top talent. It is HR's responsibility to ensure that our equity offerings are competitive and aligned with the needs and expectations of our employees.”

Furthermore, there’s an equity perspective to equity. It has the potential to be a much greater social elevator than cash, so companies should also analyse this perspective. Arguably, this is better suited to the department responsible for DEI which is, surprise surprise, the People team.

Sara also highlighted the DEI aspect of equity schemes:

“In addition, the People team acts as a guardian of diversity, equity, and inclusion (DEI) initiatives within a company. By owning the equity topic, we can ensure that equity is distributed fairly and equitably across all employees, regardless of their background or identity.”

How can we encourage and empower People teams?

Now that we’ve taken People-people on their second-largest guilt trip of the year (besides when you accidentally left an empty Alpro carton in the office/home office fridge), we’d also like to offer some peace of mind.

Owning a process does not mean that you have to do everything yourself. You could create a motion around the topic of equity or establish a committee dedicated to overseeing it within your company. By doing this, you’ll fill in any knowledge gaps with the help of your colleagues and also lay the foundations for a team that can effectively distribute information about equity secret service style: infiltration and dissemination.

In every team, there should be an ambassador who is deeply excited by the topic of equity and can spread their knowledge and passion efficiently as part of your L&D agenda. Informing the ever-shaping fabric of how employees relate to equity is where you’ll also need to pull in the founders, regardless of your company’s size and stage. At the end of the day, your company’s vision is what drives the value of your equity scheme, and your founders are the most authentic figures to share this.

Sara concluded:

“Your Head of People is in the best position to handle the communication and education around equity ownership. As stewards of the company culture and values, we can ensure that all employees have a clear understanding of how equity works, what it means for them, and how to make the most of their equity ownership.”

I’m sure you have a meeting that’s about to start, so we’ll wrap it up here. The key takeaways from this blog post are:

• The People department is best suited to owning the topic of equity schemes.

• Designing and administering the scheme is a cross-departmental effort.

• Education should be done both bottom-up and top-down.