Thousands of companies – both public and private – offer equity compensation to employees. Every employer does so for a reason, but many may be reconsidering after a few painful months in the equity markets.

Starting questions

Before you make the decision to start, keep or drop an equity compensation plan, consider these questions.

• When measuring success for your equity comp plan, what are you trying to accomplish?
• Do you have an equity compensation strategy that is well-defined? Do you have a clear philosophy and goals?
• Will your strategy stand the test of time, or will external forces like market volatility cause you to revise your plan year after year?

How to build a measurable plan

If your answers to these questions suggest equity compensation is still right for your employees, you are ready to take three important steps.

First, define what success looks like. Equity compensation is a long game. Most awards vest—and here's the key—over time. If one of your goals is to increase retention, for example, your plan should be enticing enough to weather the changing employment market.