A share scheme may be attractive for various reasons.
To attract and retain talent
By offering employees the opportunity to acquire shares (ie options) in your company, you’re offering them a chance to share company ownership. This makes your job offer more attractive to prospective employees.
Sharing ownership can foster a sense of loyalty amongst your employees. They may feel more involved in the success of your business and its mission hence they will likely stay with your business for longer periods.
To increase productivity amongst employees
Employees who are also shareholders can be more engaged in their work since they deem themselves to be responsible for the company’s value. This motivates them to work harder and innovate to increase revenue, reduce costs, or maximise profitability.
To preserve cash within the company
Offering employees shares options as compensation or bonuses can relieve your company’s cash flow pressure. They may also be more attractive to employees due to the tax benefits attached.