The Battle for Talent

The Australian job market

In an April Employment Report, jobs portal SEEK said adverts for positions were up 263.7% during 2021 compared with the previous year. During the same month, SEEK also reported that applications per job advert were at their lowest levels since 2012.

According to Robert Half’s 2021 Salary Guide report, which surveyed 300 hiring managers across Australia, 70 per cent of respondents indicated they were willing to increase salary offerings to job candidates to secure top talent.

However, higher salary offers come on top of lengthy—and often costly—processes to find the right candidates. A survey by HR recruitment software company ELMO states that the average cost-per-hire in Australia stands at $18,982.

Finding the competitive edge

The criteria that employees utilise to choose the right company for them extends beyond a pay cheque. As people emerge from the pandemic, many are considering a broader range of factors such as company culture, flexible working options, opportunity for growth, amongst others. The employee value proposition is becoming an important aspect that companies need to articulate and demonstrate.

An Employee Share Plan (ESP) assists companies to reinforce their Employee Value Proposition. An ESP is a tool that helps companies demonstrate the value they place on their employees and the role they see employees play in the success of the organisation.

Traditionally used to reward executives, Employee Share Plans (ESP) have evolved in recent years as companies realise, they can help to retain talent across their broad employee base, and at the same time help companies to stand out from their peers. A growing number of organisations are realising the benefits of ESPs with 50% of Computershare’s Australian and New Zealand clients already offering ESPs beyond the executive level.

Decades of research shows that ESPs enable employers to show their appreciation of employees’ time and skills, in short, demonstrating that they value them beyond their status as employees. In fact, an increasing number of employee-centric organisations have already chosen to use ESPs as a key part of their employee retention strategy.

During 2020, the first year of the pandemic, many of Computershare’s Australian and New Zealand clients have achieved participation rates of well over 50% for their contributory plans. This shows that when presented with the opportunity to invest a portion of their salary into the business, many employees are willing to do so.

A study Computershare conducted with the University of Melbourne evidences that employees who participate in their company’s ESP are also more engaged and interested in the company’s performance. Employees have the potential to, over time, increase their financial position by participating in an ESP.

We also know that, when the option to participate in an equity plan is available, candidates are more likely to choose to work for a company offering one.

Change is coming

Recent legislative changes in Australia have signalled greater government support for Employee Share Plans. These changes include the removal of the need to pay tax upon the cessation of an employee’s time at an organisation. Further proposed legislative changes to make ESPs more attractive to both employers and employees include, significantly increasing the current $1,000 tax exempt scheme limit to $50,000, increasing the $5,000 salary sacrifice limit and, removing the 75% offer requirement for share awards to be eligible for a deferred taxing point.

Such changes will make it easier for companies to use ESPs in addition to salaries to attract and retain talent.

Employees that participate in these plans — employees with real ownership in the company — are less likely to quit, thereby creating a more stable workforce, minimising service or output disruptions. An organisation that can offer a competitive equity plan program stands to reap substantial long-term loyalty, and associated rewards.