Motivating Staff without using Stock Options

I came across Qian Hu’s online Q&A with management and one of the questions on staff motivation and company culture caught my eye. The reply summarizes succinctly why people still work for a company regardless of monetary benefits. The question and the subsequent answer are reproduced below:

Dear David Tan, you wrote:

I notice your company don’t have stock options which encourage staff to achieve long-term goals. How do you keep your staff motivated and attract new talents without the promise of capital gains in owning equity of the company they serve?

Hi David,

Happy new Year!

People stay in a company for reasons other than competitive remuneration. For example, it might be because they like the corporate culture of the company. A company without office politics, management treating employees like family members, transparent and fair treatment of staff might be more important than stock options.

Stock options are expenses to the company and dilutes existing shareholders’ shareholdings. When Qian Hu was listed, we used to have stock options. But now we no longer have them. I think some companies’ stock options are self-serving and not fair to shareholders.

Kenny the fish

Source: http://qianhu.listedcompany.com/qa_20120116.html

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2 thoughts on “Motivating Staff without using Stock Options

  1. Not easy to find company that don’t give out stock option nowadays and that he in fact recognises stock option as expenses to the company.

    As what Buffett says:
    “Stock options are inevitably tied to the overall performance of a corporation. Logically, therefore, they should be awarded only to those managers with overall responsibility. Managers with limited areas of responsibility should have incentives that pay off in relation to results under their control.”

    The same case goes for the rampant stock buybacks that occurs whenever a company’s share price drops though the cash can actually generate more value than the buyback of the company’s share

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