Why You Should Choose RSUs for Filipino Employees: A Guide for Local and Foreign Employers on Equity Compensation‍

Why You Should Choose RSUs for Filipino Employees: A Guide for Local and Foreign Employers on Equity Compensation‍

August 30, 2023

Why You Should Choose RSUs for Filipino Employees: A Guide for Local and Foreign Employers on Equity Compensation‍

In a recent survey as reported by World Finance, Filipinos revealed their belief that savings equivalent to 2.1 years' worth of personal income would suffice for their retirement, a figure significantly lower than the regional average of 2.9 years. This concerning disparity raises an important question: how can employers address the gaps in retirement planning and financial literacy among Filipino employees to secure their future?

If you consider that the average life expectancy of Filipinos is 72, and the standard retirement age is 60, retirement savings may fall short by up to 10 years or more. This alarming reality highlights the urgent need for effective retirement planning and investment options that can safeguard the financial well-being of Filipino workers during their golden years.

Unfortunately, the lack of retirement planning is compounded by general gaps in financial knowledge among Filipinos, making it challenging for them to manage their retirement finances effectively. In many cases, retirement funds either languish in low-yield savings accounts or get depleted due to unwise business decisions or unnecessary extravagance.

The absence of sufficient financial literacy and discipline, as well as the absence of annuity-type pension payouts, can accelerate the early depletion of retirement funds. It is evident that Filipino employees require guidance and viable solutions to ensure a secure and prosperous retirement.

One powerful solution that local and foreign employers can offer to address these challenges is incorporating Restricted Stock Units (RSUs) into the compensation package for Filipino workers. Through this, employers can not only incentivize talent and foster loyalty but also support their employees' retirement goals effectively. RSUs, when structured wisely, can grow in value over time, providing Filipino workers with the opportunity to accumulate substantial wealth, and bolstering their financial stability during retirement.

This article explores the unique work ethics and values that drive Filipino employees that deserve to be rewarded with generous incentives like RSUs as part of their retirement plans and overall compensation package. Additionally, it will discuss how foreign employers in the gig economy can successfully grant RSUs to Filipino workers and outline best equity practices to maximize the impact of this powerful compensation tool. 

Understanding the Filipino Employee's Work Ethics

To build a strong and committed workforce in the Philippines, understanding the work ethics and values that drive Filipino employees is crucial. Filipino workers exhibit a unique set of characteristics that make them exceptional assets in any organization. Incorporating these values into your compensation strategy, particularly through equity compensation like Restricted Stock Units (RSUs), helps you create a workplace culture that resonates with Filipino employees and fosters loyalty and dedication. Let's explore the key aspects of the Filipino work ethic:

1. Bayanihan: Team-oriented Approach

Filipino employees embrace a strong sense of community and collaboration in the workplace, a concept known as "Bayanihan." They thrive in team-oriented environments and are highly motivated by the opportunity to work collectively towards common goals. As an employer, fostering a culture of cooperation and camaraderie can enhance employee engagement and productivity. RSUs, by tying the success of the individual to that of the company, further reinforce this team-oriented approach, motivating employees to contribute their best efforts for the greater good of the organization.

2. Utang na Loob: Loyalty and Gratitude

The Filipino value of "Utang na Loob" instills a deep sense of loyalty and gratitude among employees. When employers recognize and appreciate their employees' hard work and dedication, it strengthens the bond between them and the company. RSUs, as a form of recognition and long-term incentive, demonstrate that the company values its employees' contributions and is willing to share its success with them. This recognition fosters loyalty and commitment, reducing turnover rates and encouraging employees to invest in the company's long-term growth.

3. Pakikipagkapwa: Collective Welfare

"Pakikipagkapwa" emphasizes the importance of promoting collective welfare and treating others with kindness and empathy. This value resonates strongly in the workplace, where Filipino employees exhibit a genuine concern for the well-being of their colleagues. Employers can capitalize on this by creating a supportive and inclusive work environment that values the opinions and contributions of all team members. RSUs, as a form of equity compensation, encourage a shared sense of ownership and responsibility for the company's success, aligning with the principles of "Pakikipagkapwa."

4. Pride in Workmanship: Pursuit of Excellence

Filipinos take immense pride in their workmanship and strive for excellence in whatever they do. They are diligent and dedicated employees who go the extra mile to ensure high-quality results. Recognizing and rewarding their efforts through equity compensation like RSUs reinforces this dedication to excellence. RSUs can be structured to vest over time, motivating employees to maintain their commitment to producing outstanding work and contributing to the company's overall success.

5. Work-Life Balance: Valuing Family and Personal Time

Filipino employees place a high value on work-life balance, cherishing their time with family and personal pursuits. Employers who prioritize work-life balance through flexible schedules or remote work options can attract and retain top Filipino talent. RSUs, as part of a competitive compensation package, can be a compelling incentive for employees to choose an employer that values their personal time and well-being.

Reasons Why Filipinos Can Benefit from Equity Compensation for Retirement

Local and foreign employers have a unique opportunity to address these challenges and provide Filipino employees with a secure retirement plan through equity compensation, specifically Restricted Stock Units (RSUs). Some of the reasons why Filipinos can benefit from RSUs for retirement are as follows:

Supplementing Traditional Retirement Plans

Filipinos often rely on traditional retirement plans, government-mandated programs, or pension systems for their post-retirement income. By integrating RSUs into the compensation package, employers offer an additional layer of financial security. RSUs can grow in value over time, providing a supplementary retirement fund that complements existing plans. This approach aligns with the Filipino value of preparing for the future, ensuring employees have comprehensive retirement coverage.

Long-Term Wealth Accumulation

RSUs offer a unique advantage in wealth accumulation due to their vesting structure. As RSUs vest over time, employees have an incentive to remain loyal and committed to the company for the long haul. This aligns with the Filipino value of promoting collective welfare as employees share in the company's growth and success. Over the years, RSUs can accumulate substantial wealth, providing financial stability during retirement and bridging the gap between savings and actual retirement needs.

Promoting a Sense of Ownership

Equity compensation like RSUs fosters a sense of ownership among Filipino employees. When employees feel like they are part of the company's success, they are more motivated to contribute their best efforts. This sense of ownership aligns with the Filipino value of "Utang na Loob" (debt of gratitude), as employees are more likely to reciprocate the company's generosity through hard work and dedication.

Tax Efficiency and Deferred Income

RSUs can be structured in a tax-efficient manner, reducing the burden of immediate taxation. By deferring income until the RSUs vest, employees can potentially benefit from lower tax rates, allowing them to retain more of their earnings for long-term financial planning. This tax advantage complements the value of "Paghahanda sa Kinabukasan" as Filipinos seek to optimize their retirement funds.

Mitigating Inflation and Currency Risks

Inflation and currency fluctuations can erode the purchasing power of retirement savings over time. RSUs, as equity-based compensation, have the potential to outpace inflation and currency risks, providing employees with a more stable and resilient retirement fund. This addresses the concern of early depletion of retirement funds, which is often exacerbated by a lack of financial literacy among Filipino workers.

Indeed, RSUs present a compelling solution for Filipino employees' retirement needs, as they address the challenges posed by gaps in financial knowledge and preparation. RSUs provide a powerful tool for local and foreign employers to support their Filipino employees' financial future. Through the pursuit of an alignment with Filipino values, employers can make a meaningful difference in the lives of their employees, offering them a secure and prosperous retirement plan.

How Foreign Employers in the Gig Economy Grant RSUs to Filipino Workers

Meanwhile, in the dynamic landscape of the gig economy, foreign employers have unprecedented opportunities to tap into the pool of talented Filipino workers. With their strong work ethic and dedication, Filipinos are highly sought after in the global workforce. As these employers seek to attract and retain top Filipino talent, offering competitive compensation packages becomes imperative. Restricted Stock Units (RSUs) present a compelling solution for incentivizing Filipino gig workers and fostering a mutually beneficial relationship. In this section, we will explore how foreign employers in the gig economy can effectively grant RSUs to Filipino workers while adhering to local regulations and maximizing the benefits of this equity compensation.

1. Compliance with Local Regulations

Foreign employers must first familiarize themselves with the relevant regulations governing RSUs and equity compensation in the Philippines. While RSUs are generally recognized and accepted, certain legal and tax implications need to be considered to ensure compliance. Engaging local legal and financial advisors can provide invaluable guidance on structuring RSU plans that align with local laws and meet the needs of both the employer and the Filipino worker.

2. Tailoring RSUs to Gig Workers' Needs

In the gig economy, flexibility is key. RSUs can be tailored to cater to the unique needs of Filipino gig workers. For instance, RSUs can be granted based on the completion of specific projects or milestones, providing gig workers with a sense of achievement and incentivizing exceptional performance. Additionally, vesting schedules can be structured to accommodate the transient nature of gig work, promoting loyalty and engagement.

3. Transparent Communication

Clear and transparent communication is essential when granting RSUs to Filipino gig workers. Employers should ensure that gig workers understand the terms and conditions of the RSU plan, including vesting periods and tax implications. Transparent communication fosters trust and a positive employer-employee relationship, aligning with the value of promoting collective welfare in Filipino culture.

4. Long-Term Partnership

While gig work may be temporary, foreign employers can view their relationship with Filipino gig workers as a long-term partnership. By offering RSUs as part of the compensation package, employers signal their commitment to the gig workers' growth and success. This long-term perspective resonates with the Filipino value of debt of gratitude, encouraging gig workers to invest their talents and loyalty in the company.

5. Educational Support

Given the gaps in financial literacy among Filipino gig workers, providing educational resources and support regarding RSUs and financial planning can be immensely valuable. Employers can organize workshops or provide materials to help gig workers make informed decisions about their equity compensation and retirement planning. Empowering gig workers with financial knowledge aligns with the value of preparing for the future and contributes to their long-term financial well-being.

Equity Towards a Globally-Competitive Workforce

In the pursuit of building a dedicated and thriving workforce in the Philippines, foreign employers must recognize the significance of aligning with Filipino work ethics, values, and retirement aspirations. The disparities revealed in the recent survey regarding retirement planning underscore the urgency to address the financial challenges faced by Filipino employees. Through the integration of Restricted Stock Units (RSUs) into the compensation package, employers can bridge the gap between existing retirement plans and actual retirement needs, providing a secure and prosperous future for their Filipino workforce.

Similarly, as foreign employers embrace the gig economy to tap into the rich pool of Filipino talent, structuring RSUs to meet the unique needs of gig workers and ensuring compliance with local regulations becomes vital. Transparent communication, educational support, and a long-term partnership mindset can foster loyalty and trust among Filipino gig workers, resulting in a mutually beneficial relationship that fuels growth and success.

We at Upstock also hire Filipino freelancers to help us advocate for a more equitable world through equity ownership. Our RSU plans are designed in a way that gives value to hardworking local laborforces across the globe. To understand how our flexible equity packages suit your Filipino team’s needs, book a demo with us today.

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