Welcome to Attune Perspectives – a series where we go beyond the technical detail and share our views on the questions that matter to business owners. This article asks whether equity really delivers the motivation and loyalty it promises.
Welcome to Attune Perspectives – a series where we go beyond the technical detail and share our views on the questions that matter to business owners. Each piece builds on one of our practical guides. This one follows our guide to share schemes for SMEs, and asks whether equity really delivers the motivation and loyalty it promises. In this piece we have an expert view from Ulrich Seega of talent advisory firm SANDPartners.
For many growing businesses, introducing a share scheme feels like the obvious answer.
The logic is straightforward. Give key people a stake in the business and they’ll think like owners, stay for longer and help create more value.
Sometimes that’s exactly what happens.
But not always.
The reality is that equity is only one part of what attracts, motivates and retains exceptional people. In our experience, the businesses that get the greatest value from employee ownership are those that understand this distinction.
Share schemes are often introduced as a retention tool.
While equity can certainly strengthen long-term commitment, it rarely compensates for poor leadership, limited opportunity or a lack of trust.
The best people want to know where the business is going, how they can influence its success and whether they believe in the people leading it.
If those foundations are missing, the value of a future shareholding quickly becomes secondary.
Senior people are not a single group.
Some are natural entrepreneurs. They are excited by the opportunity to build value, take calculated risks and share in the rewards of long-term success.
Others are motivated by different things: autonomy, professional development, meaningful work, flexibility or the opportunity to lead high-performing teams.
Introducing equity without understanding what motivates the individual risks solving the wrong problem.
The question should not simply be, “How much equity should we offer?” but, “What are we trying to achieve, and is equity the right way to achieve it?”
Equity works best when the opportunity is credible
Even the most generous share scheme will have limited impact if employees cannot see a realistic path to creating value.
People are more likely to engage when they understand:
A meaningful opportunity supported by a credible business plan is far more powerful than a generous award built on unrealistic expectations.
The strongest share schemes reinforce a sense of partnership.
They recognise that founders and senior employees are working towards the same objective: building a better business.
When equity is presented simply as another element of remuneration, much of its potential is lost.
When it is positioned as an opportunity to participate in creating long-term value, it becomes something much more significant.
It’s a view echoed by those who spend their careers recruiting, advising, and coaching senior leaders. We asked Ulrich Seega, founder, executive search consultant, and leadership coach, whether equity incentives really work in practice. Here’s his view.
“It sounds like a dream: work hard, grow fast and suddenly a modest stake is worth more than any pension pot could deliver. Through the talent lens, though, reality is more complex and success depends on “who”, not “how much”.
Equity incentives work when they match the psychology of the people receiving them and reinforce the strategy of the organisation. In talent terms, they work when people understand the value, trust the rules and feel the equity reflects their contribution and future potential. They work when vesting aligns with the real business plan, so leaders stay focused on outcomes rather than dates. They work when the scheme is simple enough to be understood, fair enough to be respected and governed tightly enough to feel credible. Most importantly, they work when the upside genuinely matches the entrepreneurial mindset of the people receiving it – when ownership and long-term value motivate them more than short-term rewards or status. In those conditions, equity becomes a signal of shared mission, a driver of alignment and a meaningful reason to stay and build.
Managed badly, equity incentives destroy trust, collaboration, energy, strategy and focus – fundamental elements of performance and success.”
A well-designed share scheme remains one of the most effective ways of aligning the interests of founders and senior employees.
But it should never be viewed in isolation.
The businesses that attract and retain exceptional people combine equity with a compelling vision, strong leadership, meaningful responsibility and a culture where talented people can make a genuine impact.
Equity doesn’t replace those things.
It amplifies them.
About Ulrich and SANDPartners
Ulrich Seega works with investors, CEOs and their teams on performance, change and career transition. He is the founder of executive search and talent advisory firm SANDPartners and specialist leadership coaching boutique Black Slope™.
A sports scientist and qualified executive coach by background, he has hired, advised and coached leaders in the UK and internationally in sectors ranging from start-ups to the FTSE 100. Earlier in his career he presented live sports news on German radio and trained special forces in skiing. He wrote the Institute of Risk Management’s guide to hiring Chief Risk Officers and has presented and published on various talent & leadership related topics.
SANDPartners provides executive and non-executive search, leadership coaching (black-slope.com), investor services and human capital solutions. Find out more at sandpartners.co.uk.
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Signing the documents and notifying HMRC can feel like the finish line for a share scheme, but that’s where the real work starts. In the third Attune Perspectives piece, we look at what keeps a scheme working as the business grows. That means making sure employees understand their awards, planning for leavers and keeping the administration up to date. Mark Williams, Partner at Greene & Greene Solicitors, explains why equity headroom and clear drafting matter from day one.
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