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Employer Solutions Insights: A Well-Conceived Share Plan Can Be Critical To Long-Term Success

Having the right employee share plan in place has been fundamental to JTC’s long-term success, underpinning its ability to motivate and incentivise an increasingly diverse and geographically spread team of employees, and consequently deliver first class service to its global client base.

Those were the thoughts of Senior Directors Miranda Lansdowne and Simon Gordon who recently took part in a webinar with the London Stock Exchange Group and MM&K, exploring how firms can approach share plans and make them work for their own bespoke needs.

“Having a plan in place – our ‘Equity for All’ scheme – has been critical for us,” explained Miranda. “We have traded through numerous crises, including the crash in 2008 and of course through the recent pandemic, and having that platform in place has really been the bedrock of our resilience, and our ability to service clients.”

“It has created a unique relationship between us as a business and us as a team of people and has created our own distinct culture – We are all invested in our mutual success and we certainly would not be where we are today without that plan.”

Agreeing with Miranda, Simon argued for their strategic importance: “Share plans are not just a mechanism for retaining employees; they help align employee interests with other stakeholders, promote an environment that encourages innovation and constant improvement – and as a result everyone benefits. There is strong rationale for their existence as part of a long-term business strategy.”

Expanding on the benefit of how a share plan can feed into external performance, Miranda added: “Shared ownership is what we also sell to our clients. The commitment of our people to shared success is a real differentiator for clients, and that is always something our clients appreciate and understand, and that, as a listed business, resonates well with investors too.”

Miranda pointed, however, to the need to think carefully about how to implement a share plan, what a share plan might look like in practice and how it would help a business meet its long-term strategic aims before committing to it:

“JTC is a global business. We could have adopted 17 different plans for each of the locations we operate in, but we settled on the most straightforward version for all our locations – it was a case of remaining flexible where possible and maximising tax efficiencies. My key advice would be to keep share plans simple to ensure they remain fit for purpose.”

There are a number of external factors to consider too when setting out a share plan, such as Brexit, as Simon explained:

“Brexit has the potential to impact share plans in a number of ways,” he said. “As a third country in relation to the EU, for instance, it might be necessary to rethink details around GDPR while a general divergence between the UK and EU might mean that in future it is more difficult for a company with a global workforce to put in place a plan for all employees. The thing about a share plan is that all employees must be able to benefit, that is critical to creating the shared culture and its overall success.”

JTC’s own journey as a business and the role shared ownership has played in that journey has made for a fascinating case study. Initially an independent business, employee ownership was quickly embedded in JTC’s framework by CEO Nigel Le Quesne through the use of an employee benefit trust (EBT). Ensuring continued employee share ownership was a key consideration as JTC grew, initially taking private equity backing from CBPE and subsequently listing on London Stock Exchange in 2018.

“Key to our listing on the LSE was the ability to be masters of our own destiny,” said Miranda. “Shared employee ownership was a key part of that, and we are really trailblazing now in seeing what that looks like in a public environment.”

“What we have learnt through the IPO process is just how important it is to have the courage of your convictions in terms of what is right for your business and for your stakeholders. It is really important not to lose sight of what your values are, what you believe in and what you want to achieve. Shared ownership has been critical to our success and is now the foundation upon which our business is built.”

“Communication with employees about share plans is key,” added Simon “particularly in the M&A market where we might have new employees who have not previously participated in share plans, we have always sought to be completely transparent and open about what we are doing and why. The important thing is to reinforce the message that share plans are all about long-term value.”

Simon also pointed to the importance of doing your homework before entering into any sort of share plan: “You need to go into share plans knowing what you are doing,” he asserted. “Share plans can be complex and administration heavy, so having the capacity, knowledge and resource to manage the share plan effectively and avoid costly errors is really important. Having a good control framework in place and agreed responsibilities for communications around the plan are vital too.”

Commenting on the cost implications of having a share plan in place, Miranda added: “The administrative workload should not be underestimated. Education amongst staff around what the plan means for them, why it is there and why it is so valuable for them can take significant time and resource, particularly when it comes to dealing with multiple queries from a global workforce.”

“It is a cost, but the important thing to remember is that, if you are well set up to manage that process, the monetary cost is considerably outweighed by the benefits of being able to retain staff, boost productivity and generate better overall performance. There is no doubt that we would not have listed without a full plan in place first, but it is also clear that with that groundwork in place we can maintain a higher level of client service excellence through our invested employees.”

Since the webinar JTC has completed the acquisition of RBC cees Limited, now rebranded to JTC Employer Solutions.

JTC Employer Solutions has a heritage spanning more than 25 years as a market leader in retirement and reward services. To find out about our Employer Solutions services and team please click here.