Equity incentives for LED listed companies are a "good medicine" if they are used well!

It is undeniable that the equity incentive system is a rare "good medicine" for modern enterprise management. It has played a certain positive role in improving the company's organizational structure, reducing management (agency) costs, improving management efficiency, and enhancing the company's cohesion and core competitiveness. If a company wants to "survive", it must have a large number of employees who are willing to "work hard" for the company. By encouraging employees to buy company equity, the company binds everyone together to form a community of interests, a community of cause, and a community of destiny. When employees own company equity, their sense of belonging to the company will be greatly increased, and they can also give full play to their subjective initiative when working for the company. At the same time, the increased "centripetal force" of company employees also means an increase in the value of the company's human capital.

But this does not mean that equity incentives are "universal glue" that can be used indiscriminately. Companies should also pay attention to the methods and methods when using equity incentives to maximize its effectiveness.

Equity incentives are both internal and external to the enterprise

First of all, it needs to be reminded that although the core of corporate equity incentives is "lure with profit," there are always some people who have different pursuits. For example, Tsai Chongxin gave up a stable job with an annual salary of 3 million Hong Kong dollars, and started a business with Jack Ma despite the strong opposition of his family... When facing such people with equity incentives, the first thing the boss has to do is to "sell" dreams to employees and encourage employees to work hard for their dreams. The driving force of corporate dreams is from individuals to teams to mechanisms and culture. The so-called equity incentive is to turn the dream of one person or the dreams of several people into the dream of a group of people! Putting the weight of dreams on employees can boost equity incentives and achieve the intended results, because condensing shared dreams is the prerequisite for the success of equity incentives.

Secondly, companies must choose the right incentive targets and pay attention to two types of people who cannot be ignored: one is employees whose performance and personal enthusiasm will directly have a great impact on the company's strategic goals; the other is employees who play a key role in corporate policy control and core process operations. For a relatively technologically advanced industry such as LED display companies, the first type of people and the most strategically valuable human capital are concentrated in the R&D technology department, while the second type of people are concentrated in other key departments such as corporate management and marketing. LED screen companies must learn to "treat them differently" - give dry shares to those who deserve dry shares, and give real shares to those who deserve real shares.

On the other hand, this embarrassing phenomenon also exists in the industry: in the face of equity incentives of some companies, employees have become "immovable kings". Why? It turns out that generally speaking, internal employees have relatively preferential prices for purchasing corporate equity, which can better stimulate employees to actively purchase. However, these companies feel that they have suffered a loss through such a "price reduction" equity sales method, and have to let employees buy at "market price." Of course, employees are not happy - since you don't give internal discounts, why should I buy your shares? It's better to choose someone else who is "profitable"... This is human nature. If you don't treat employees as your own, employees will also "separate" themselves from the company.

The impact of equity incentives on the outside of the enterprise

Nowadays, the era of working alone has passed, and the era of partnership has arrived. Modern enterprises are all about "integration". How many resources and channels you can integrate will determine how much wealth you will get in the future! Therefore, in addition to equity incentives within the company, it is also important for corporate suppliers and dealers to create a community of interests, especially in a segmented industry such as LED display.

For LED screen companies, establishing strategic cooperative relationships with upstream suppliers and downstream dealers through equity incentives is a good choice to become an "oligopoly" in the segmented field. Let suppliers and dealers hold a certain share of the company's equity and enjoy the benefits brought by the appreciation of the company's equity, so that the relationship between suppliers, dealers and the enterprise is not only an affiliated enterprise relationship, but also a community of interests.

Equity incentives are undoubtedly the best bridge and link in integrating resources, and they are also a good choice for LED display financing. However, one thing needs to be made clear. In the process of corporate financing, entrepreneurs should take control as a prerequisite. As far as external investors are concerned, as long as they are allowed to make a fortune silently, the right to speak of the company is still in the hands of the entrepreneur.

Summary: Therefore, if LED display companies want to implement an equity incentive system, they must choose incentive methods in a targeted manner based on different strategic orientations, build a core talent echelon through equity within the company, and attract core talents. Outside the company, they can quickly gain market scale through equity mergers and acquisitions, and form closer stakeholders through the equity bundling of dealers, suppliers, and investors. Ultimately, through the leverage effect of the capital market, the company will move toward an oligarchic status in market segments.