Of the 172 tech startups surveyed, 44 percent said they give employees a stake in the company. A year ago it was 38 percent. Another 42 percent are considering employee participation in the future. Only six percent of startups do not rely on employee participation and have ruled it out for the future.
The Future Financing Act, which is intended to make employee share ownership more attractive in Germany, came into force at the beginning of the year. Bitkom-President Ralf Wintergerst commented:
"Startups usually can't pay top salaries, but they can allow employees to participate in the financial success of these often rapidly growing companies. The framework for employee participation was improved at the beginning of the year; now it's time to take advantage of these new opportunities."
Startups most frequently rely on virtual shares (36 percent). Share options and real shares follow, each accounting for six percent. Only 24 percent of startups that offer employee participation offer all employees a share. In 41 percent, executives and other employees participate, and in 30 percent, only executives participate.
Employee participation as an additional incentive
The respondents cited the desire to further motivate employees and drive the startup's success as the main reason for employee participation (88 percent). The concept is also intended to strengthen employee retention (79 percent). 66 percent want to use this method to attract skilled workers whose salary expectations would otherwise have been unattainable. Half see it as a moral and societal duty to allow employees to participate in their own business success. 40 percent want to keep personnel costs low in this way. In 20 percent of cases, it is the investors' desire to involve employees. Twelve percent cite employee participation as an argument for attracting foreign skilled workers.
In startups that don't offer employee participation, 33 percent see the high administrative burden as an obstacle. Nearly a quarter (24 percent) prefer traditional salary payments or find the legal situation too complicated. 21 percent do not want to dilute their shares. 18 percent consider German employee participation models unattractive from a tax perspective, up from 26 percent a year ago. Ten percent of startups fear slower decision-making processes due to employee participation. Seven percent say investors reject it. And almost one in four of the young companies surveyed (23 percent) simply hasn't yet addressed the issue.
