India’s non-banking finance company, IIFL Finance, has unveiled an employee stock ownership plan (Esop) worth ₹180 crore for its frontline sales employees. With shares priced at ₹10 each, this scheme is said to be one of the largest in the banking, financial services, and insurance sector. The Esop will be granted to employees with at least two years of experience and meeting the highest performance ratings. IIFL Finance aims to retain talent and enable wealth creation for its junior frontline employees, who have contributed significantly to the company’s growth. This initiative comes at a time when the sector has witnessed high attrition rates, primarily due to the lure of better salary packages and perks in fintech and startup companies.
According to IIFL Group founder Nirmal Jain, the Esop allotment scheme is designed to provide wealth creation opportunities even for junior frontline employees. By offering shares valued at 100% of their cost-to-company, employees will be recognized for their loyalty and exceptional performance. The Esop plan is a retention tool to retain high-potential employees, ensuring the company’s growth trajectory remains uninterrupted.
The banking and financial services sector has experienced an average annual attrition rate of approximately 50% in FY21 and FY22. This increase was largely due to several individuals being enticed by higher salaries and other benefits offered by fintech and startup firms. Although attrition levels have reduced to around 35-40% since mid-last year due to limited opportunities in a challenging funding environment for startups, the number remains high. Jain states that during the Covid-19 pandemic, companies like IIFL Finance have been competing with young, agile companies for talent. Therefore, this Esop scheme aims to retain high-potential employees at the frontline.
The Esop scheme is valued at around 100% cost-to-company. For instance, an employee earning ₹4 lakh per year will be rewarded with Esops worth the same value. This initiative is seen as an acknowledgment of the owner mindset of the frontline employees who have remained loyal and made significant contributions to the company’s growth.
The move by IIFL Finance comes as part of its broader strategy to retain talent and consolidate its position in the market. By offering an Esop plan, the company aims to not only reward its employees but also provide them with an opportunity to share in the company’s success. This initiative is expected to boost morale and loyalty among junior frontline employees, whose role is crucial in driving the company’s customer acquisition and revenue generation efforts.
