Nowadays, Organisations are using value enhancing mechanisms to inculcate a feeling among key professionals to undertake tasks independently as Entrepreneurs that would not only result in their own professional development but would also leads to enhancement in their personal wealth. Such value enhancing mechanisms involves issuance of shares for their hard work and contribution in the form of Intellectual Property Rights (IPR), know-how, skill and technical expertise. The shares issued to such employees (either at a discounted price or against the know-how contributed) are, in legal parlance be termed as “Sweat Equity”.

However, this does not mean that Sweat is only meant for start-ups. The companies, which are already well-established, may also offer Sweat Equity to its employees for their providing know-how, to the company.

On the other hand, as the company grows, the management would make all requisite efforts to retain the best talent of their Organisation who have been the stepping stones for the growth of the business by offering them additional incentives as a reward for their hard work and association. Such employees are offered ESOP at a price which is less than the market value of the share. ESOP is a good retention tool as well as a tool to recognize loyalty and performance of employees.

Today many business entities (whether existing market player or a Startup) both at India and abroad, are utilizing this scheme as an essential tool in order to Recruit, Retain and Reward, their real jweals.