Startups to soon have standard framework for ESOPs for employees

For an employee to last long in a startup, he/she needs a well established beneficial framework in place that can ensure work-life balance. At present, the absence of standard metrics to offer Employee Stock Ownership Plans (Esops) in startups is one such issue that calls for an established framework.

Taking the first step in the direction to build a standard framework for startups, LetsVenture, an angel investment firm, has opened up discussion on ESOPs and liquidity policies for startups employees.

The retention of talent is one big problem for startups today. In the absence of a balanced framework, employees dread joining newly launch firms or startups.

Adoption of best practices by startups, who are unicorns or soon to be ones will ensure that the next waves of talent actually end up joining Indian startups, said Ganesh Nayak, Director of LetsVenture, launching a campaign to identify best practices for startups.

There is no boost up for employees, who give their valuable years to startups, in the form of ESOPs liquidity, according to him.

There is a need for a proper policy that can facilitate startups employees to get ESOPs in a transparent manner, he added.  Currently, Indian startups do not have any standard metrics related to offering ESOPs to employees.

A recent survey revealed that close to 75% of senior and junior employees are ready to switch job to larger and structured companies. More than 90% of the respondents in metros look for jobs at established firms.

Merely 5 per cent factors ESOPS as a sole reason to join startups, added the survey. The main reason for employees not giving value to equity as the only handful of startups have delivered a return to them.

The development was first reported by ET.