Last week, Twitter CEO and co-founder Jack Dorsey gave one third of his shares worth £128million to Twitter employees. Despite being a Twitter co-founder, he now owns less of the company than many other single investors, amongst them former Microsoft CEO Steve Ballmer.
While giving away over £100m of your personal fortune is unusual, Jack Dorsey is not the first entrepreneur to see the value in giving employees a piece of the action. Across the tech sector we work with a number of smaller company heads who already share ownership or percentage profits directly with their staff.
So why would anyone, let alone a savvy entrepreneur, give away their power or profit to employees?
It could be a much smarter idea than you think.
To send a message
Twitter’s £128m giveaway came directly after 8% of the workforce were made redundant. Jack Dorsey called it an opportunity to “reinvest directly in our people”, and it sent a clear message that despite the redundancies, Twitter was financially committed to the success and wellbeing of its remaining workforce.
To attract and retain the best talent
A lot of top IT and digital talent want more than a standard salary and a simple 9 to 5. They want to be a vital part of something exciting. Sharing ownership or profits attracts top talent and gets them invested in the fate of the business, increasing commitment and developing loyalty.
To get commercial focus
Many employees are detached from the commercial realities of business. They work their hours, and they get paid – regardless of how well the company is doing. By giving employees a financial stake in the company, you increase their understanding of the realities of needing to make money. As a result you may see duvet days decline, and productivity increase.
To drive innovation
With the daily realities of work, it can be very hard to encourage employees to innovate. However, with a stake in the game, top talent is more likely to consider ways to get their company ahead of the competition. Developers are especially likely to have personal ideas and side projects they run outside of work. If they see a long term future with their employer then the chances of them sharing their intellectual property is greatly increased.
To increase return on investment
Sharing part of the company should not be considered a giveaway, its an investment. In his own handing over of shares, Jack Dorsey said ‘I’d rather have a smaller part of something big, than a bigger part of something small’. He was not just talking metaphorically, he was talking about return on investment. If you firmly believe that your people are your key to business success, then you may find that sharing a little now will deliver you a lot more in the future.
Looking for talent who want to get involved? We have an extensive network of IT and digital specialists looking for opportunities with entrepreneurial and forward-thinking companies. To find out more send us an enquiry, or directly contact a member of our team.