With the competition for talent and retention remaining fierce, it’s essential to consider what your company is offering in terms of incentives. Mairead Harbron explores. Talent attraction and retention are important issues for all private businesses in today's competitive environment. Employees and management constantly compare remuneration packages between companies to ensure that they receive the best deal and one that suits their needs and values. There are many reasons private businesses implement a management incentive plan (MIP). The benefits for both the company and the individual include: retaining key talent in the industry; recruiting key people and help compete with larger organisations; providing real ownership to employees in the form of equity; the linking of rewards to the growth of the business. Not only that, but MIPs are tax-efficient. Capital gains tax (CGT) of 33% applies to the sale of equity, whereas income tax of 52% applies to a cash bonus, along with employer PRSI of 11.05% (which does not apply to options or free equity). Types of incentive plan Employers can choose from many incentive plans, and a MIP can be either an equity incentive plan or a cash incentive plan. It doesn't always have to result in a company giving away equity, as certain factors may preclude them. Cash-based plans usually involve a cash bonus, pension contribution or shadow equity. While pension contributions may be eligible for relief, cash bonuses and shadow equity are typically subject to tax rates of up to 52%. In contrast, private businesses can choose from various equity schemes when implementing an incentivisation plan. Typically, these businesses shy away from Revenue-approved schemes as they can be onerous to implement. They also provide less flexibility to the private company, as liquidity may be needed within a defined timeframe. Ultimately, the scheme chosen will depend on the stage of the business (established business or scale-up), the type of employees to be rewarded (top executives, key management, employees, etc.) and the objectives for the business (high growth or an established business with bolt-on acquisitions). Plan design The plan's design will be dependent on the type of plan chosen. Nevertheless, organisations should consider the following when putting together their plans: targets or hurdles should be challenging but achievable; the scheme should be simple to understand; the scheme should be designed to have a life of, say, three to five years; typically, there will be milestones within that time frame; whether the scheme will be open to current employees only, or if future employees will also be included; and how will leavers be dealt with? There is the potential to treat good and bad leavers differently. What organisations can do now When deciding on whether to implement a MIP, private businesses must ask themselves: Do other companies in your industry offer a MIP? Do your compensation packages adequately attract the right person for the job? It is essential to ensure that the package is suited to the position (whether managerial or technical) so that it is in line with other similar roles. What's the right MIP for your company? Each company is different, and every MIP can be designed to suit the company’s needs. Private companies often have more flexibility in the types of plans available, as Revenue-approved schemes are typically not suitable. What's the right MIP design for your company? Any MIP must be appropriately designed and implemented, and the tax implications for both employees and the employer considered and managed. Designing the MIP is only the first step in the process. After the MIP is implemented, the employer must also consider other aspects, such as the initial valuation of the shares, share reporting obligations and payroll obligations. Mairead Harbron is Director of Entrepreneurial & Private Companies Practice at PwC.

Employers need to be up to date on developments around the right to work being allocated to those fleeing violence in Ukraine. Moira Grassick explains what you need to know. The war in Ukraine has had a devastating effect on many, and Ireland is attempting to help the people affected. 40,000 Ukrainian refugees are expected to be in the state by the end of April, and those people need the support of Ireland’s business community. This includes finding meaningful employment while here in Ireland. The EU has created a specific Directive – the Temporary Protection Directive – to coordinate member states granting Ukrainian citizens a residence and work permit, known as a Temporary Protection Permit. This temporary protection will be valid for one year and can be extended for up to three additional years. The Directive may directly impact employers as it will afford the right to work in Ireland to those coming from Ukraine. Currently, the Temporary Protection Directive has been given immediate effect. However, the situation is fluid regarding access to employment and the implementation of the Directive within each member state’s structures and systems. Temporary measures Temporary measures are in place to protect those fleeing the war, which is different from the usual immigration regulations. The Irish Government has stated that once someone has received their letter granting Temporary Protection under the EU Directive, they are entitled to seek employment, self-employment, or vocational training education here in Ireland. The European Council implemented Decision 2022/382 on 4 March 2022, giving effect to the Council Directive 2001/55/EC. The right to work is provided for under Article 12 of the 2001 Directive, which states: “The Member States shall authorise, for a period not exceeding that of temporary protection, persons enjoying temporary protection to engage in employed or self-employed activities, subject to rules applicable to the profession, as well as in activities such as educational opportunities for adults, vocational training and practical workplace experience. For reasons of labour market policies, Member States may prioritise EU citizens and citizens of States bound by the Agreement on the European Economic Area and legally resident third-country nationals who receive unemployment benefit. The general law in force in the Member States applicable to remuneration, access to social security systems relating to employed or self-employed activities and other conditions of employment shall apply.” This is a developing situation, and to ensure Irish society can help Ukrainians coming to the state, all employers must keep themselves updated on developments from the Department of Justice and related government departments dealing with immigration. Moira Grassick is the COO at Peninsula Business Services.

The most effective way of protecting your business against cyber-attacks is to be vigilant and empower your staff through appropriate cyber-security training. Noel Comerford explains. Cybercrime has seen unprecedented growth in both impact and sophistication over the last few years, and as the crisis in Ukraine continues, the cyber threat landscape is getting blurrier. Even before these increased threats, Irish organisations across public and private sectors were vulnerable, as we saw in May 2021 when the HSE was the victim of a cyber-attack. The European Central Bank and the Irish Central Bank have put businesses on high alert. While the National Cyber Security Centre assessment of the current cyber threat is low, it highlights potential for escalation. There is not only a risk of direct attack, but also a secondary risk of contagion, or secondary impact, from criminal actors reusing cyber warfare tools and techniques. Cyber criminals are seizing opportunities to interfere, and businesses must remain vigilant as the threats may soon become a reality. If you’re responsible for keeping your organisation secure, you already know that no organisation – regardless of size or industry – is immune from attack. When an incident occurs, it can quickly escalate, leading to high-profile media attention, financial losses, operational disruption, increased regulatory scrutiny, and damage to customer loyalty and investor confidence. Having a cyber incident response plan is the first step, but for the plan to be effective it must be tested across the organisation, involving all relevant stakeholders and focusing on key business processes and systems. It’s no longer the sole responsibility of the CTO, CFO, CSO or even the IT manager to protect against attacks. So, what else can you do to improve your organisations’ resilience to potential cyber-attacks? Educate your people – Human error is often regarded as the main cause of cyber security incidents. Educating your people on simple steps they can take to protect against attacks is crucial. These include: not opening suspicious emails; avoiding unsolicited links in emails; using secure file sharing solutions; and supporting people in understanding their role in cyber defence and how to report suspicious behaviour. Secure your processes – As cyber criminals become more sophisticated, it’s paramount to ensure your systems and processes give the highest possible protection. You can do this by: ensuring all remote access to your systems requires multi-factor authentication, and all cloud services are correctly and securely configured; ensuring all software vulnerabilities are patched, especially those known to be exploited in the wild; if working with Ukrainian organisations, taking extra care to monitor and inspect traffic to and from these parties; and ensuring availability of those in key cyber response roles in case of emergency. Understand your risks – Although every industry has its sectoral nuances, the widespread risks are often similar. Understanding where your vulnerabilities lie will help ensure you have the best protection: take the time to understand the threats and the exposure that may be unique to your organisation; if operating in the financial services sector, check your SWIFT security; look for and report on anomalous behaviour in your network; and use anti-virus and anti-malware solutions. While government, financial services, energy and critical infrastructure sectors are currently at the most risk because of the situation in Ukraine, the threat is heightened for all industries. As the risks across the landscape increase, it’s crucial to adopt a heightened security posture and actively design, review and test crisis and backup plans. Staying up to date with news on cyber-attacks and how they are evolving can support you to adapt your approach accordingly. Finally, empowering employees to understand their risks and take an active role in preventing them will help keep your organisation secure. Noel Comerford is a Director in the Risk Advisory practice at Deloitte Ireland’.

Private companies that fail to think long-term about ESG reporting risk losing out on funding opportunities. Andrea McAvoy explains why. One of the advantages of a private company structure is greater autonomy over governance. Theoretically, private companies face a lighter burden of bureaucracy than their publicly listed peers, allowing them to be nimbler. Nor do they have to cater to the demands of public shareholders increasingly focused on environmental, social and governance (ESG) factors. Even without these external pressures, however, private companies need to start thinking carefully about their ESG strategy and what it will mean for their long-term future. Times are changing and, in the past year alone, three separate developments have shunted ESG to the forefront of the SME agenda. 1. Regulatory changes The assumption that only listed companies will be subject to increasing ESG regulation is outdated. While ESG regulations introduced by the European Union, such as the Corporate Sustainability Reporting Directive (CSRD) and EU Taxonomy Regulation, will impact large private companies by 2023, their scope will expand to include all small- and medium-sized enterprises (SMEs) by 2026. These new regulations will also have an indirect impact on SMEs, because they will influence their business relationships with listed customers and suppliers. The requirement for ESG data disclosures — in particular, climate-related information — will only continue to grow. 2. Funding requirements ESG is now part of the lexicon of most private fund providers – from private equity to debt and beyond. According to the Pitchbook 2021 Sustainable Investment Survey, 81 percent of general partners are either already evaluating ESG risk factors or will be focusing more on ESG risk factors in the near future. The integrity and diligence of such pre-investment ESG reviews may vary. However, at a minimum, private companies should develop an ESG narrative to prevent excluding themselves from funding opportunities. While most private equity (PE) firms include ESG as a non-financial risk for reviewing investment decisions, some also use it to help identify opportunities for value creation during the deal life cycle. Ensuring that ESG is addressed in all forms, and integrated into a company’s long-term strategy, can help private companies maximise exit value, compete for capital against listed peers, and align with increasing listing requirements. More than 50 percent of the global stock exchanges published ESG reporting guidance last year, compared to just 15 percent in 2015. 3. Commercial longevity In a rapidly evolving world, where the operating landscape is adapting constantly to sudden events — emerging pandemics, climate disasters and social disruptions, for example — a focus on ESG could help SMEs mitigate future risk. Developing a genuine ESG narrative can also support key stakeholder relationships with customers, employees, and communities. Some elements of this narrative will be aligned with immediate outcomes (i.e., how short-term expense will impact the bottom line). Others will relate to the cost of capital or the ease of doing business over the long term. Applying an ESG lens to business strategy can bring broader benefits, however, helping SMEs shift the strategic focus from short- to long-term value creation, measured not just by profit, but also by environmental and social value. Andrea McEvoy is Climate Change and Sustainability Services Senior Manager at EY.

People’s productivity and wellbeing go hand-in-hand, but how can organisations go about achieving the best balance in a hybrid working environment? David Keane explains. The COVID-19 pandemic has resulted in one of the most significant shifts in working practices ever seen. This enforced experiment has allowed organisations to reimagine how and where work gets done, and the changes they introduce will be here to stay. As offices reopen and organisations decide on the most appropriate workforce model for their staff, customers and business, they must define how their teams will enhance productivity. They will also need to ensure that flexibility and employee well-being take centre stage in driving performance. There are several steps managers can take to ensure employees perform well in a flexible working environment that also supports their well-being. 1. Implement the digital tools that drive performance Investing in digital tools that support your hybrid-working model will enable business leaders to address critical challenges. Digital tools should facilitate team and cross-team communication. They should be fast and flexible and provide real-time data to managers and team members on their daily, weekly and quarterly performance indicators. A dedicated digital space for collaborative team-wide tasks will improve employee engagement and facilitate transparency on value-add activities. 2. Improve internal communication While communication is important for employees and management alike, top-down and organisation-wide communication must be clear, concise and continuous. This approach will foster a culture of adaptability and trust throughout the organisation. Maintaining clear lines of communication, especially among hybrid teams, will be essential to improving operational performance. Consider starting each day with functional and team performance meetings. Fifteen-minute huddles – virtual or face-to-face – will enable teams to assess their performance targets, prioritise tasks for the day ahead, and discuss risks and issues that may hamper performance. 3. Drive new ways of working With dispersed team members, business leaders may have to implement new ways to drive team performance. Relying on what worked for a purely traditional or remote-working model will not be as effective in a hybrid working environment. Focus on establishing clear roles and responsibilities to ensure smooth operational transitions between and within teams. Be metrics-led and allow decision-making based on measures that matter to the organisation. And finally, drive new behaviours that align with the team's overall values. These actions will ensure that employees are going in the right direction, are aligned to team objectives, and clear on their role in adding value to your organisation. 4. Train team leads to manage a more flexible workforce As the work environment and team dynamics continue to evolve, managers will need to adapt their skills to manage staff, both in-person and digitally. Creating a dynamic that works in a hybrid environment places more pressure on management to balance the need for task-orientated outputs with employee satisfaction and well-being. Daily coaching with team leaders can support businesses in embedding a management style that enhances performance while enabling team leaders to have productive conversations and develop team members. 5. Optimise processes and embed a proactive approach to change As working models are changing and adapting, it is time to review existing processes and assess whether they are still fit for purpose. By analysing current practices and eliminating non-value-add activities, your team can become more agile and lean. This should be a continuous exercise. Each staff member should feel empowered to drive change, and organisations should strive to foster a proactive view of change that positively impacts team performance. David Keane is Director of People & Organisation at PwC.

A healthy workplace culture is essential in helping both employees and employers to thrive, so what can organisations do to improve workplace culture in a hybrid-working world? Patrick Gallen explains. As we emerge from the pandemic and begin to reflect on what will change in the new hybrid environment, there has been a lot of talk about office culture. The pandemic has given organisations an opportunity to review the challenges and opportunities presented by the pandemic-driven work-from-home experience. Taking everything they have learned on board, they can now rethink, reshape and improve workplace culture, creating the best possible hybrid working experience for their employees. What is ‘culture’? Workplace culture is a shared set of attitudes and behaviours that affect how people interact at work. It can have a huge impact on an organisation’s effectiveness. The days of wandering through an office and getting a feel for the vibe of the place – intuitively assessing body language and interpersonal interactions – are over. Managers need to acquire tools and skills that can help them evaluate employee relationships and gauge productivity, without relying exclusively on in-person observation. Healthy cultures create tremendous corporate value – up to threefold higher returns to shareholders than that earned by companies with unhealthy cultures, according to McKinsey research. The question is not whether a company’s culture is ‘strong’ in itself but whether it serves the employees and the business. The evolution of workplace culture Before COVID-19, workplace culture mainly emphasised the importance of the firm’s productivity and profit above all, but organisations can’t expect to return to the same culture that existed in 2020. There’s been too much change, both at the individual and business level. This crisis has created an opening for organisations to experiment and adapt their policies and practices. From an organisational point of view, during this global disruption, we saw offices with healthy cultures prioritise the needs and well-being of their employees while continuing to meet (or even exceed) profit and productivity goals. Employees, on the other hand, saw their personal and professional lives converge during the pandemic and were given room to reconsider their priorities. Working from home highlighted the challenges of work–life balance. It also revealed which elements of the in-person workplace are most important to employees, and which are dispensable or even detrimental – long commutes, for example. Remote work has enabled workers to reconsider the meaning and purpose of their jobs. Prioritising employee needs Now that we are entering the next phase of this pandemic, consultation on employee needs must be at the top of leaders’ agendas, whether it is about hybrid work, work-life balance or ESG initiatives within the organisation. Employees have had the opportunity to re-evaluate their values, and they want to see these values reflected in their workplace culture. The future of the workplace must emerge from a dialogue between employees and leaders. Employees want their needs considered when finding the right balance between returning to the office environment. Leaders should, therefore, solicit and carefully consider employee feedback about the advantages and disadvantages of in-office versus remote work. Now is the time to reshape workplace policies and corporate culture to accommodate what works best, technologically and socially, for a business and its people. Leaders must adopt new, appropriate managerial approaches, model best practices and clearly communicate their rationale and purpose. A healthy workplace culture that works for its people and business is not only the right thing to do, but can also positively impact the bottom line. It is vital that companies take the steps needed to strike the right balance. Patrick Gallen is People and Change Consulting Partner at Grant Thornton.