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Sekunjalo’s staff-loyalty plan may pay off

It will boost future loyalty and contribution at Independent.

The Sekunjalo Independent Media consortium is making a big and stylish entry into the gates at Independent Newspapers with ‘shared capitalism.’

The consortium, which is buying Independent Newspapers, is reportedly allocating a 10% stake in its interest in the company to staff. And staff “would not be required to put forward any funding” for the shareholding.   

Wow, what an entry!

Well, this is absolutely crucial in modern day business. So, do it if you can afford it. There is evidence that it works.

It is highly likely Sekunjalo will reap great rewards on its return on investment (ROI) over time, but of course if other key fundamentals of the business are managed properly.

Nothing is guaranteed, but research has shown time and time again that benefits that allow staff to have shares in their companies encourage better engagement and that workers who own a stake in their employing companies are likely to become more business aware and therefore take an active interest in the company’s well being.

A sense of belonging is a critical element.

The fact that a staff member owns shares in the company would increase a sense of belonging and make employees keen about what makes the values of these shares increase or decrease, especially in the case of a listed entity.

Furthermore it is assumed that companies should offer share plans because it will increase the loyalty, retention and work rate of staff.

In its 10% shareholding offer to staff, Sekunjalo says it thanks its employees for being loyal to the company over the years. But in this case it has to be said the company is doing more than that. It’s doing it mainly for future loyalty and contribution. The future is very important. This offer also comes at a time when media in general and print media in particular is facing drastic and dramatic changes.

Almost miraculously, the advent of social media has changed the way the game of news-gathering and dissemination used to be played. In this life time, news travels at a break-neck pace, which print-media is unable to match because of operational processes and time constraints.

A half solution, however, has been the online content of these major print titles that Independent newspapers has in abundance. But time is running out very fast. Sekunjalo would need all the brains it can muster to catch-up. Those newsrooms are full of brain-power – of people who know the game as it is played today. These news-room brains could assist Exco to chart the way forward and help the company catch-up.

What matters is quality news devoid of unnamed sources and manufacturing of stories. But these people need utmost motivation to be able to do a good job. So, the 10% shareholding to staff is but a great start. Show them you care and they might just surprise you with amazing work.

Besides, Independent Newspapers had been neglected for a number of years by its Irish owners. Staff – from top to bottom – has been well aware of that.  

So, participation in share ownership by staff is good in a number of ways.

Shares have proven to be long-term investment helping staff identify with shareholders and make them more determined to contribute to the company’s success.

They are an ideal method to give staff a stake in the company and share in the results of it. It also links the employee and the employer on a long-term basis and offers opportunities for rewarding them in a tax-efficient manner so that with time, much of the profits from the share will escape the ravages of income tax.

But there is a problem. This is if he/she leaves the employ of the company, it may no longer be appropriate for an ex-staff member to continue with the shareholding.

But the solution to this problem is that Sekunjalo must clarify and unpack the shareholding mechanism from the outset on how the scheme is going to work exactly.

Hence it may be advisable to deal with this point at the very beginning by including pre-emption rights in the company’s Articles by which other shareholders may have the right to buy-out the shares at fair value.

This is good.

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