Tufan Erginbilgiç, CEO of the engineering firm, told employees in an email that the shares would be handed out in September.
“These results have been made possible thanks to your hard work and our collective actions. You are making the difference. It is therefore important that you share in our success," Erginbilgiç wrote to employees. The shares are set to cost Rolls-Royce £30 million.
Ifty Nasir, founder and CEO of share scheme management company Vestd, explained that share schemes can improve retention.
Speaking to HR magazine, he said: “The Rolls-Royce CEO’s comments highlight his desire to give employees ‘skin in the game’, in a bid to empower them to contribute to the company’s future success.
“Research shows clear benefits of introducing company share schemes as a way to recognise and reward employees. According to Vestd’s data, 93% of company leaders tell us that their share scheme helped their company grow, while 95% said that their share scheme improved employee loyalty [May 2024].
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“All of this makes company share schemes a vital tool to help businesses recruit and retain the talent they need to grow.”
Rolls-Royce, which employs around 21,000 people in the UK, announced that it had made double the profits in the first half of 2024 than the same time in 2023.
This followed Erginbilgiç’s October 2023 announcement that 2,500 jobs would be cut within the business worldwide, to make the company "more efficient and effective".
HR should consider what model will benefit their organisation before implementing a share scheme, Nasir advised.
He added: “Business leaders and HR teams need to think about how much company equity they want to set aside for employees, what time or performance-related conditions they want to set, and how to price the shares.
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“The answer will differ for every business, but it’s important to get a clear idea of how you want the scheme to work for your own business.”
Once share schemes are implemented, communications can make the difference between low and high take-up, added Duncan Brown, an independent award researcher for the Institute for Employment Studies.
He commented: "The downsides can be a lack of incentive and motivational impact, and also lower-paid staff having the cash to save and purchase shares if this is required, depending on the type of scheme.
"But that's why communications is so important. Broadly, the more the company engages and communicates with employees regularly about the share scheme the greater the awareness level, and so the positive impact it has on employees and company performance.
"Share schemes reinforce open and participative company cultures but don't replace them. The impact of such schemes on their own is much more limited."
