According to a survey, only 44 percent of German startups rely on employee engagement. But nearly half of them could imagine that in the future.
When it comes to hiring talent, startups compete with large companies or medium-sized companies. But for most of them, it’s impossible to keep up with their high fixed salaries. Since they nonetheless rely on bright minds, the employee engagement model is an alternative: Instead of paying higher annual salaries, employees participate in an ideally growing community. As the digital association Bitkom has now found in a survey of 201 tech startups, not even half of the startups are currently using it. Their employees only have a 44 percent stake in the company.
According to the association, this is primarily due to the still challenging tax framework. Another 46 percent of companies surveyed can envision employee engagement in the future. Only eight percent would rule out this reward model entirely.
In this context, Bitkom Chairman Achim Berg criticized the fund’s site law reform, which took effect on July 1 and which came under fire from the startup scene after the first drafts at the beginning of the year. The federal government tried to compensate for the “international deficit” in the case of employee participation in Germany. However, the new regulations will fall short and go beyond the reality of most startups, Berg says In a press release.
A good third depends on virtual posts
According to the survey, virtual investments are the most popular among German startups. According to this, 36 percent of the tech companies surveyed use it. These virtual stock options are a purely contractual obligation, not a real ownership interest. Their payments are tied to the occurrence of a specific event, for example an exit or an IPO. According to Bitkom, only seven or three percent of startups rely on “real” stock options or company stock.
According to the association, half of all startups want the next government to make improvements and create better conditions — especially for popular virtual investments. This is the only way German startups can compete internationally for the best teams, Berg says.
30 percent of surveyed companies that rely on employee engagement also do so with CEOs. In 53 per cent of managers and a select few employees. Only 17 percent of them actually have all the employees involved in the startup.
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