EY powered Rapid Transformation at English Tea Shop Organic using a Comprehensive ESOP model

‘English Tea Shop Organic’ (ETS) brand of Amazon Trading Ltd., established in 2010, has been on a truly transformative journey since implementing a company-wide open book management program in 2015. This was followed by a unique Employee Share Option Plan (ESOP) embarked in 2019 to help build a ‘significantly employee-owned organization’.

The ESOP’s Phase 1 in 2019 saw the company granting 15% of the equity stake to employees. ETS just announced the launch of the second phase of the ESOP, increasing the shares allocated to employees up to 30%, thus accelerating the journey of making the company a significantly employee-owned business. Moving towards this model is already paying rich dividends along with an array of benefits for its eligible employees, with the company successfully withstanding the impact of Covid-19, showing solid resilience and rapid growth.

ETS’s aspirations of doing things differently by putting purpose and wellbeing for people at the core of its strategy further flourished with a solid partnership with Employee Share Ownership Plan (ESOP) specialists of Ernst & Young as advisors. The company’s mantra of “Love & Prosperity through Community” has acted as a blueprint on its road to success in specialty and natural food markets in over 50 countries. ETS has won leading international awards for its sustainability approach, including the 2020 Queen’s Award for Sustainability (UK) and the Great Game of Business (USA) All-Star International Champion in 2020.

The ETS ESOP was a custom-made effort by EY to build an inclusive culture and to express good faith through recognizing and rewarding employee efforts by allocating equity ownership in the company considering their good standing tenure of service, individual performance and level of significance in contributing to the organization’s wealth creation. The initiative also opened doors for the voice of the staff to be represented at the board level. This will further enable the company to take difficult decisions such as foregoing short-term benefits to achieve longer-term objectives, with wider support.

At a recent fireside chat announcing the second phase of the ESOP, Ernst & Young Senior Partner and Consulting Head for Sri Lanka and Maldives Arjuna Herath commented: “Where majority of the companies allocate around 5% – 10% of their total issued share capital towards share-based incentive plans, ETS has taken the initiative of allocating a generous 30% of the total issued share capital of the company to a Trust, of which beneficiaries are employees, at zero cost, upholding its commitment to its founding purpose. It’s even more remarkable that even their shop-floor level employees qualify for this scheme after completing just one year of service!”.

Participating in the fireside chat, ETS’s Director Strategy, Niluza Badurdeen, argued that “One of the planet’s most pressing challenges is the rising levels of social inequalities; this is probably the biggest emergency for countries in the Global South. The core purpose of ETS is to be a catalyst in solving this very problem in our industry. The ESOP has helped us get closer to our wealth-sharing endgame of becoming an employee-owned business. By empowering our employees with knowledge and making them business people through our ‘Big Game’, we believe it will truly uplift their passion and commitment in extending great value within our value chain and creating a net positive impact on society and the environment at large.”

Considering the philosophy of Total Reward Schemes in organizations, Arjuna Herath commented, “Medium to Long Term Variable Compensations can promote long term wealth creation for an organization”. He further stated, “it creates a positive impact over retention whilst supporting the organization achieve sustained growth and profitability. Since equity-based schemes such as ESOPs are a source of Medium to Long Term Variable Incentives based on both Fixed and Variable Components, it radically maximizes the shareholder value of an organization.”

Equity Linked Compensation Plans are one of the most successful forms of creating a performance culture within organizations, given the unique nature of promoting employee participation to enhance companies’ financial results and the ability to seamlessly align employee interest with businesses. In addition, ELCPs can be designed to fit various strategic needs of companies, which EY has been able to master throughout the years.

English Tea Shop Organic is an independent specialty tea company that works directly with small organic farmers. Built on the principles of Creating Shared Value, ETS is committed to uplifting its employees, farmers, society and the environment while developing sustainable solutions through its business activities.