Co-authored with Futurz, the startup solution to engage all teams in the company's value creation. Alumni EDHEC Entrepreneurs S21 - Future 40 Station F (2021)
What is at stake?
Value sharing with employees involves a better distribution of the wealth generated by companies. It usually entails financial sharing over the medium to long term when the company achieves success. Employees then reap the benefits.
Currently, the main mechanisms include:
- Profit sharing (a legal and mandatory mechanism for companies with 50 or more employees): Involves redistributing a portion of the company's profits to its employees.
- Employee profit sharing (optional): Allows employees to be associated with the company's results and performance based on freely chosen and pre-defined criteria in a profit-sharing agreement.
- Employee ownership: Aims to permanently involve employees of a company, whether publicly traded or not, in its capital through means such as stock options, stock appreciation rights (SARs), and free share distributions.
- 📣 Futurz, an innovative alternative to traditional employee ownership
Futurz enables all employees (full-time, freelancers, etc.), from anywhere in the world, regularly to invest small amounts in a financial asset correlated to the company's value. Upon the company's sale, they can realize a profit.
Why is it important?
Formalizing value sharing with employees allows:
➡️ Improvement of the employer brand and attraction of talent;
➡️ Engagement and retention of employees essential for the company's long-term success
➡️ Enhancement of a sense of long-term belonging
➡️ Promotion of a culture of collectivism
→ Note: Depending on the mechanism used, there may be tax advantages for both the company and employees.
Three actions to take right now
1️⃣ Offer fair compensation and avoid significant salary disparities.
2️⃣ Introduce bonuses (individual gain) or profit-sharing (collective gain) to reward achievements.
3️⃣ Establish an employee ownership system.
- Choose a mechanism that aligns with employees' and company's needs.
- Seek guidance in developing a personalized plan.
- Regardless of the mechanism used, be informative and transparent: Clearly present the scheme to candidates/employees, who may not be familiar with it, and be honest about possible outcomes.
We created Futurz to address the shortcomings of existing mechanisms. In fact, in 3 out of 4 cases, the shares promised through BSPCE (stock options for French startups) are never received. In the remaining 1/4, only a lucky few ones have been able to benefit financially. Others have lost a lot, because they have often been forced to buy their shares at a high price, then the company fails to achieve the expected success. Value sharing shouldn't be a lottery ticket. A mechanism is needed that is fair and prevents employees from being deprived of the rewards for their efforts.
Clément Parramon, Head of Growth & Impact chez Futurz
📚 Further Reading
📖 Three levels of engagement in value sharing (Prophil Study, 2021)
📖 Kit BSPCE Galion
📖 The Other Side of BSPCE
📝 Different Types of Employee Ownership (Epsor)
✍️ Contributors to this Document
The solution Futurz is an innovative alternative to traditional employee ownership.
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