In the wake of the COVID-19 pandemic, many things have to shift in the work place in order to better cope and adjust. A simple yet transformative change is the shift from traditional to a more mobile-friendly recruitment process to fit with growing smartphone usage. This advancement has already been apparent in recent years following the advent and continued growth of technology. However, its importance has been made all the more stark by current changes wrought by the pandemic. Thus, a mobile-friendly recruitment process like a website, texting and video- conferencing, is becoming one of the most crucial HR trends to follow. It needs to be easy to read, quick and user- friendly. If it is hard to read, slow and difficult to use on the phone, then it increases the risk of losing out on qualified candidates who abandon the process (Snook, 2020). So as an HR department, ensure that candidates can go on their phones or tablets and be able to search for the perfect job on your company’s platform (Krumrie, 2020).
Attracts a wider pool of candidates
Working with statistics, not only has it
been found that 70% of job seekers use their smartphones to search for jobs,
but also, for nearly every 1 in 5 U.S adults, the smartphone is the single
source of internet at home (Hedreen, 2019). Extrapolating the cost of internet
and technologies to access it, this number is likely higher here in Kenya. Furthermore,
it is estimated that 75% of the world will have access to the internet
exclusively via smartphone by 2025 (Hedreen, 2019). Mobile technology, therefore,
is increasingly becoming an essential in people’s everyday lives and
subsequently a sure way to reach out to potential candidates as a significant
portion of talent can be found on the phone. More candidates also means higher
chances of drawing in top talent.
Saves time and money
Owing to its simplicity as compared to the
traditional methods of recruitment such as physical interviews, mobile-friendly
methods speed up the recruiting process because candidates are able to respond
quickly to both job advertisements and recruiter questions at any time of the
day. This saves time as there is no need for scheduling specific times for
interviews, looking for appropriate venues to cater for all the potential
candidates and spending hours on hours looking for the best hire: “An overlong
recruitment cycle will result in the loss of talent from your pipeline.” says
Paul Beard, Skywater Search founding partner (Krumrie, 2020). Additionally, it
can be done from anywhere, even when travelling or moving in between meetings
in the workplace. So it saves time and money for the company, recruiters and
the candidate while, increasing the chances of both parties finding what they
Improves candidate experience
It makes the recruitment process more
convenient for the candidates. Phones are always on the person or near them and
so are not difficult to reach at any given moment as compared to computers. It
is precisely this aspect of flexibility coupled with the ability to have one’s
documents like the resume and certificates just a few clicks away that make
smartphones appealing to use for just about anything, including job
applications (and recruitment!). Add to that the fact that many people are in
careers or industries that require them to be on their feet most of the time,
like engineering, medicine and sales, it provides candidates with an easier,
cheaper and less stressful way to search and apply for jobs. Moreover, “millennial
workers have shown that they want a different application experience, one that
brings jobs to them quickly and easily.” according to founder of former CEO of
job- matching app Switch, Yarden Tadmor (Hedreen, 2019).
Enhances company’s brand
Mobile-friendly intergrations make the company look modern and up to date which attracts more candidates because it demonstrates the company is willing to adapt and cares about the experience of its candidates and employees. Also, making mobile applications available drives traffic to the careers site, bringing more attention to the company in general. For that reason, the career site should also be mobile-friendly in order to facilitate the process. For instance, it should be easy to navigate and straightforward. Besides, the brand image should be reflected too, to have the most impact.
Also known as social hiring or social
recruiting, social media recruiting is now a coveted strategy in attracting
both active and passive job candidates.
Firstly, social media recruiting simply refers
to the use of social media channels to recruit potential candidates. Different
social media platforms such as Twitter, Facebook and LinkedIn, as well as
websites: like Indeed.com, forums and blogs, can be used to attract, find and
hire wanted talent (TalentLyft, n.d.). Case in point, an Adweek report suggests
that 92 percent of recruiters use social media to find the best suited
candidates for the positions required (Clarke, 2020).
More importantly, because of the great
incongruence between the talents that companies are searching for and that
which is being offered in the market, social media recruiting provides a
platform through which talent can be easily identified and a connection
established directly (Clarke, 2020).
What social media recruiting looks like:
LinkedIn is one of the top social networks
when it comes to finding skilled candidates as 87 percent of recruiters report
using it. This is because it is a platform specially made for professional
networking so people share their resumes and companies can post jobs. It is
followed closely by Facebook with 55 percent and then Twitter with 47 percent. However,
more platforms are being used like Instagram (Clarke, 2020).
process involves activities such as (SmartRecruiters,
Tweeting links to available positions and
also using appropriate and relevant hashtags; industry-specific hashtags
Contacting ideal candidate using direct
messaging on Instagram or Facebook
Sharing videos on YouTube that best
showcase the company’s culture and core values
Benefits of social media recruiting:
you to reach a wider audience
Job seekers, particularly the young ones,
otherwise known as millennials, are fans of social media platforms and can
easily be reached in such platforms. They are also the group that is looking
for online information and so to find the best talent among them, social media
is fundamental in establishing an online reputation and advertising the jobs as
well as presenting corporate values (Clarke, 2020).
Along with members of large social media
sites, such as Facebook and Instagram, there are talented people who are more
engaged on sites that fill both social media and professional needs. As such,
in order to have a prominent and effective recruitment presence online, you
must be active online and then establish yourself as an authority in your
respective field (Clarke, 2020).
Helps in reaching passive candidates
Passive candidates are not actively
seeking new positions or applying for new jobs but make up 70% of the global
workforce (Kappel, 2018). They are usually more qualified than the active
candidates and as such already have jobs. This makes it difficult to find them
as you will not find them on job boards but social media provides a way to
reach them (Kappel, 2018). For instance, referrals through social media are a
great tool that expand the candidate pool; employees already know about other
talented individuals and so can directly reach out to them on social media or
post something they know will attract other top talent.
Crucial for targeting the perfect candidates
Owing to the diversity of social media
users, these platforms are filled with people with a myriad of distinctions:
different backgrounds, diligences and genders. This then provides the perfect
environment for finding any type of talent or candidate (TalentLyft, n.d.).
Moreover, in a case where the candidate persona
you are looking for is very particular and narrowly defined, then advanced
search filters can be used for more specificity.
Establish a more personal connection with potential candidates
Social recruiting is considered to be
effective when it mimics or carries out like a conversation. Because of its
nature, social media allows candidates to connect with your company in a
low-key, low- pressure environment which makes for a more personal and
authentic communication and connection with the candidates (TalentLyft, n.d.). Additionally,
millennials want emotional connection and to feel like they are working for the
right company, without having to make a compromise with their beliefs and
ethics (Clarke, 2020). As such, there are many companies that are changing
their work environments to make it so that the employees feel empowered and
“that they can show up to work and be themselves, as the lines between work and
life continues to blend together,” according to the President of workplace
communication training company Fierce, Stacey Engle (Snook, 2020). This process
can be easily facilitated and accelerated through social media recruiting.
Gather more referrals
This method makes it easier for employees
to refer candidates (TalentLyft, n.d.). For instance, they can share
information widely and faster by just clicking once to ‘share’ certain
information like a video that highlights and outlines the company’s core values
and culture, or a link stating positions that are available. The information is
shared with their family members, colleagues and friends.
The process of finding candidates through social media is very cost effective in comparison to the traditional methods of recruitment like TV, newspapers, specialised publications, paid websites and radio ads (TalentLyft, n.d.). Posting videos showcasing the company’s culture, sharing links for open positions are actions that cost nothing yet reach a large number of people in a short amount of time making social recruiting very beneficial and efficient.
Every company has a
reputation. It could include thoughts about your products, services, leaders,
team members, history, and more. And your company’s reputation can also go
beyond to inspire a specific perception — emotional, instinctive, intellectual
— in the people who see your ads, use your products, and eventually, speak to
others about you. That reputation is known as your brand.
Your company also
has a second brand related to its primary brand about how you’re viewed as an
employer. This is your employer brand, and it lives and breathes in the minds
and hearts of your former, current, and future employees.
In today’s increasingly competitive job market, a positive employer brand is critical. Without one, hiring and retaining the best employees becomes challenging — and costly. You need talented, leadership-bound workers to drive your business forward, and the best way to find them is to cast the impression that your company is a great place to work. Everything from the salary and benefit packages you offer to advancement opportunities to weekly happy hours, theculture of an organizationand the treatment of its employees can greatly impact the impression you’re trying to make on potential candidates.
What is an employer value proposition (EVP)?
An employer value proposition encompasses your organisation’s mission, values, and culture, and gives employees a powerful reason to work for you. It’s everything your company can offer as an employer, in exchange for all the skills and experience your employees bring to the table.
An organisation benefits from a well-designed EVP, communicated often to both potential and current employees. A strong EVP can attract and retain the best people, help prioritise goals and agendas company-wide (especially in HR and workforce planning), help re-engage a dispassionate workforce, and reduce hiring costs. Most of all, it contributes to a favourable and robust employer brand.
Before you craft
your employer brand proposition, your company’s benefits should be
well-established, well-defined, and a proven hit with your current employees.
And if they’re not, and you’re looking to revamp things, consider what
influences a person’s decision whether to accept a job offer or not
Who does employer branding?
There can often be confusion about who owns the organisational task of employer branding. At smaller shops, it could be the CEO controlling the messaging or, more traditionally, talent or HR leads. At larger businesses, recruiters might lean on their HR, communications, or marketing departments to help them craft and hone an employer brand.
What’s most exciting
is that your employer brand is no longer just what your company website says it
is. Like it or not, employer branding starts and ends with your employees.
The employer branding process
Step 1. Get
familiar with your company
When you’re able to define your company’s unique attributes, it’s easier to hone an EVP. Get to know your organisation’s core business, vision, mission, values, and culture. Understand what your company objectives are, and what sort of talent is needed to accomplish those objectives.
Step 2. Do an
audit of your employer brand
already know exactly where your product or service stands in the marketplace,
but you may not be as aware of how your company is viewed in the market or how
it’s perceived by your current employees. Conduct research both internally and
externally with applicant surveys, internet and social media searches, and/or
firms that conduct reputation monitoring. See what’s working at your company so
you can keep doing it, and what areas need improvement — both when it
comes to company operations and morale, but specifically with the talent
acquisition process in order to discover ways to improve it.
Step 3. Define
an employer value proposition
Now comes the part when you can make your corporate messaging sing. Draft an EVP that clearly communicates the values of your corporate brand, while reflecting what’s special about working at your organisation. It should align with your customer brand, but also speak directly to your employees.
Step 4. Use
When designing an EVP or other employer brand messaging, consider enlisting the talents of the creative wordsmiths in your own marketing or communications department (or outsourcing this and other brand work to an agency). By borrowing a few marketing techniques — such as starting every branding endeavour with the questions, “WHO are we trying to reach? And WHAT do they want?” — you’ll be in the best position to craft an employer brand that speaks to your exact target audience.
Step 5. Build
engagement among current employees
To help you
become a trusted employer, look no further than your own workforce. For finding
out what it’s like to work for your company, employees are 3x more likely to be
trusted by leads than your CEO. Your employees also shape your company’s
culture, live your values, achieve your objectives, and manifest your company’s
mission. Without their participation, your employer brand would be nothing.
Here are a few ways to get your workers more engaged with your employer brand:
Hone the message.
Use a set of words or phrases that become a part of the company’s vernacular, as a way to describe your company’s values and what the experience of working for your company is all about. Keep it simple, clear, informative, and unique. Use this language in HR or recruiting meetings, and focus this language for your career pages, recruiting sites, social media accounts, and anywhere else your employer brand can be leveraged.
Show off your employees (by having them show off themselves).
Did you know that one in four candidates view other employee profiles immediately after finding out about a job opportunity? Encourage your workers toupdate their online profiles so they’re current, professional, and attention-worthy. Your People or HR department can send out helpful email reminders, no-hassle links, and tutorials on how to do this. You can also leverage the experiences, expertise, and personalities of your employees by having them tell their stories on panels and become subject-matter experts or mentors on topics they’re qualified to write or speak about in their field. Any time your former or current star employees bring positive attention to your customer or employer brand, you’re putting your best recruiting foot forward.
Turn your employees into a social recruiting army.
As your employees update their personal and professional profiles, ask them to write (honest, but ideally favourable) reviews of your company on job listing sites, to post company news and updates, and to share job opportunities to their personal networks as they come up. The average network size of a company’s employees is 10x larger than its own. Since your employees are your unofficial recruiters and marketers, the first step of a good employer brand strategy is to help employees use LinkedIn and other social media networks to represent themselves and spread the word about your company. Ask your social media manager to send guidelines on where and what to post and send links to make it easy.
Nail the onboarding process.
The first 90 days of employment are critical to turning a new team member into a productive employee. Your company can make a deep and lasting first impression by offering a smooth onboarding process. Arm new hires with the tools, introductions, and orientations they need to hit the ground running and start thriving in their new roles.
Offer skills training and advancement opportunities.
Nothing saves recruiting costs more than promoting from within, so give your workers opportunities for personal growth and professional development. Offer management and leadership training, special certifications, and plenty of avenues for career advancement to capture job candidate interest and commitment from your employees.
Step 6. Write snazzy
Job posts are often the first contact candidates have with your company, so they’re a perfect way to promote your employer brand. If you’re going for a brand voice that stands out, instead of, “must demonstrate excellent communication skills” you might try, “You’re the type who’d just as soon pick up the phone than wait for an email; the phrase ‘cold call’ doesn’t give you the shivers,” as a more descriptive, attention-getting way of bringing your organisation’s personality to life. Then, optimise your search engine results using — but not overusing — words and phrases you know your ideal candidates are searching for.
How to improve your employer brand
To increase the number of quality, enthusiastic applicants vying
for positions at your company, your CEO, leadership, marketing team, and
recruiters can all help develop and growth your employer brand. Whether you
have a big budget or small, whether you’re a large company or a start-up, there
are plenty of strategies you can use to think like a marketer, build deep and
meaningful relationships with your staff, and boost your employer brand like a
1. Don’t focus
value proposition will be the strongest if you can talk about how a role will
be meaningful (personally fulfilling or about a global good) or a superior work
experience, over compensation, especially if you want to attract younger
candidates. Your EVP should be unique, compelling, and tuned into the deeper
motivations of why a person might want to join your team.
2. Start a
If you’re a recruiter with a marketing mindset, you know that content — and lots of it — can be a great strategy for competing in a noisy marketplace. Job seekers often check out a company’s blog to get to know an organisation on a more human level. You can post company news, culture updates, and articles written by your employees or company leaders, all in a personable voice. A blog can also be used to highlight the unique people policies, processes, and programs that show your organisation’s commitment to employee happiness.
3. Use rich
Use high-quality videos, photos, and slideshows to tell your company story, celebrate your diverse employees, and show off beautiful workspaces. A welcome video from your CEO or hiring manager is a great way to make an introduction, as are staff interviews talking about their experiences working for your organisation. Plan and budget for these and other marketing costs at the start of each quarter.
4. Hire for
It’s no surprise that who you hire says something about your brand. Having unique thinkers from a diverse range of backgrounds shows you’re not only walking the walk as an equal-opportunity employer, but also extending your brand’s reach (both customer, and employer) into new groups — a sound business move, and a key strategy when building a powerful employer brand.
Much like everything else, Job security isn’t what it used to be. Individuals hardly maintain the same job for 20-30 years anymore. Job security is defined as the probability that an individual will keep their job; a job with a high level of job security is such that a person with the job would have a small chance of becoming unemployed. In today’s economic and innovative climate, you’re considered a veteran if you hold a position for 10+ years.
typical narrative for success and job security has always begun with good
grades, a successful university career and a healthy respect for authority. Vocational
training and career advice maintains hard work and patience are the key to a
long, successful career. As you have undoubtedly come to realise, the requirements
for job security now extend beyond these two values. Ahead of you is a long and arduous career journey
surrounded by an unhealthy level of of
competition in a very noisy marketplace. Arguably, job security no longer
exists or economic strife has least accelerated the average career development
timeline and shortened job viability.
Governments and individuals are understandably motivated to achieve higher levels of job security. Governments attempt to do this by passing laws which make it illegal to fire employees for certain reasons while individuals can influence their degree of job security by enhancing their skillset through education and experience, or by moving to a more favourable location. Unions also strongly influence job security. Jobs that traditionally have a strong union presence like as government jobs jobs in education, healthcare and public service are considered very secure while many non-unionised private sector jobs are generally believed to offer lower job security; although this varies by industry and country.
economic theory holds that during periods of economic expansion businesses
experience increased demand, which in turn necessitates investment in more
capital or labour. When businesses are experiencing growth, job confidence and
security usually increase. The opposite often holds true during a recession. Businesses
experience reduced demand and look to downsize their workforce. And this is
exactly what we’re currently experiencing in the wake of the COVID-19 pandemic.
Workers are experiencing uncertainty over job security as well as their ability
to secure paid leave if required to self-isolate. The insecurity particularly impacts
casual workers who do not have the same entitlements as full time workers.
The main idea in maintaining job security would be to make yourself invaluable – not only to your current employer, but to future employers as well. Try to learn new skills and adapt to changing markets. It’s all about self-awareness. Stay positive and find helpful ways to cope with the psychological pressures of job insecurity because your willingness to adapt to change makes all the difference. Keep an eye out for opportunities with other organisations in your industry, too. It does no harm to know what’s available, and it’s not disloyal to make contingency plans for possible shifts in your career. Be sure to keep your resume up to date so that you’re always prepared to apply for new positions that may come up. And, if you can, save some money, so you don’t have to worry about paying your bills straight away if you do lose your job. That way, you can focus on the positive, not on doubt and uncertainty.
if you’re an employer, you’ll want your company to maintain a positive reputation
for job security. A stellar brand as an employer will improve you bottom line, quality
of employees available to you, your position in the marketplace and positive engagement
from your workforce. Keep insecurity low by focusing on quality rather than quantity
in your employment practices. It’s important to hire people who will multiply
the value of your company offering so in economic downturn, almost every
employee is essential. This may sound idealistic – and it probably is however, minimising
‘dead weight’ and loss is basic economic theory for a successful outcome. Put measures
in place to mitigate disruptions like workplace insurance, severance packages
and financial buffers. Therefore, even if you have to make hard decisions your employer
brand is secure.
Let us know in the comments what your concerns and solutions are!
Employee Wellness: Creating a nutrition program for your employees
Providing food for your employees might seem like an intimidating prospect when considering the added costs while in hindsight, your organisation will actually profit in numerous ways. More importantly, it’s a much needed humanitarian act as the coronavirus pandemic has increased levels of food insecurity in the country. A good number of your employees are providers for urban households and were likely struggling pre-pandemic. These households have to now cater to children at home and a reduced salary post-pandemic. The closure of certain borders also caused a spike in commodity prices. Households are likely skipping meals while others are starving. By implementing a nutrition program, you will not only be helping your employees but, you’ll be creating a happier, healthier, more productive workforce.
Instating an Employee Nutrition Programme Is Important
A nutrition program can have a significant difference in an employee’s overall health. If your employees are not eating or are skipping meals, they are not getting the nutrients they need to be at optimal health and are at risk of becoming sick. Providing them with nutrition will ensure they stay in good shape. It will potentially, save you a lot of sick leave days and employer health costs. Investing in employee wellness will ultimately save your organisation money.
Secondly, feeding programs make people happy. As per a
Peapod survey, 67% of employees who worked at companies that had nutrition
programs said they were extremely happy with their jobs. Food, fruits and
vegetables, have been especially linked to good mood and improved mental
health. Food literally makes people happy. A happy workforce is more productive
which will translate to an increased bottom line. Additionally, employee
satisfaction will help you retain staff and save you the costs and time it
takes to hire new workers.
Thirdly, food increases worker focus and creativity.
According to a publication in the British Journal of Health Psychology, the
brain operates best when there is 25 g of glucose in the bloodstream. This
amount can be provided by a single banana or a bowl of cereal. Should you
provide such, your employees will be more engaged, focused, and energetic.
Nutrition programs additionally build an attractive
work culture and good PR. Employees will view it as a very huge perk.
Best of all you can implement a feeding program for your esteemed employees without investing an obscene amount provided you go about it in a smart way. You can spend as little as Ksh 250 – Ksh 500 per week for a family of four. That is inclusive of breakfast, lunch and dinner. You can also provide 2 meals a day if you’re operating on a tight budget.
a. You can decide to create a fund and allocate money to staff on a weekly basis.
b. You can also distribute foodstuff to the households of individuals in the program. It would be wise to partner with community-supported agriculture groups who will give you great deals and whose produce is mostly organic. You can also source products straight from farms. According to Standard Media, a cabbage at a farm in Nyandarua goes for Ksh 24 but you will buy it at Ksh 80 in Nairobi.
c. Another alternative is carryout meals. You can pack meals in boxes and employees can pick them up as they go home.
DECIDE ON MEALS OR MENUS TO BE GIVEN
A good meal should consist of a staple, a bit of unsaturated fat, veggies or fruits and a stew/ sauce/ relish according to FAO. Meals can also be planned according to need because different people have different dietary needs. Pregnant ladies, for example, need more iron-rich foods compared to men who need more starch from staples and legumes.
Recommended foods that will help you stick to the Ksh 250 to Ksh 500 allocation include green grams, potatoes, vegetables, low-cost fruits like bananas, whole grains, starchy tubers, spaghetti, eggs, rice, all-purpose flour, oatmeal, lentils, beans, and bread. Surprisingly, if properly planned, the same monetary allocation could include meat and even seafood.
What can a good nutrition program include?
If you do
decide to give out meal boxes to your employees every week, here is an example
of what you can include. Remember it’s advisable to buy things in bulk, e.g sacks,
and then divide it among your employees. This will save you a lot on costs. For
500/= a week you can provide breakfast for 5 days and 10 lunch and supper meals
to a family of four in Nairobi, consisting of:
1 ½ litres milk – Ksh 39. A litre of milk from a dairy farmer is Ksh 26. This could cover 3 different breakfasts assuming they use 500ml per day.
¼ kg sorghum- Ksh 26 or ¼ kg millet -Ksh 15. This is enough to make porridge for at least 2 days.
1/4 kg of green maize. This can be boiled or roasted. A kilo goes for Ksh 18 if bought in bulk so this will cost the company about Ksh 4.5 per employee.
Lunch and Dinner
use the following foods to make several meals like ugali Sukuma, rice and
beans, githeri, rice and peas, ugali and cabbage, ugali and eggs, rice and
green grams, mukimu, rice and potatoes and so on.
2 kg of maize to be milled for ugali flour – Ksh 74. A 90kg bag of maize costs Ksh 3330 meaning if bought in bulk a kilo should cost you about Ksh 37. 2 kilograms of maize is enough for at least 4 meals.
1/2 kg of tomatoes- Ksh 15 .Vegetables at the farmers market Kenya retail for Ksh 30/ kg.
250g cooking fat- Ksh 24.5. 10kgs of cooking fat cost roughly Ksh 980 if bought in bulk.
½ kg rice – Ksh 43. Rice goes for an average of Ksh 85 per kg and ½ a kg could fit 2 meals.
½ kg Potatoes – Ksh 25. A 50kg sack costs Ksh 2500 at the farmers market.
¼ kg bulb onions – Ksh 19. A 13kg net goes for Ksh 1000. Alternatively, you can go for spring onions which cost Ksh 20 per kg. ½ a kg should be enough to cater for an entire week of cooking.
¾ kg green maize- Ksh 13.5. A 115kg sack of green maize sells at Ksh 2100.
½ kg beans – Ksh 30 bob for Mwezi Moja beans and Ksh 49 for Rosecoco. Alternatively, you can offer ½ kg peas which will cost you Ksh 29. This can cover 3 meals in the week and can be paired with staples such as rice and green maize for githeri.
¼ kg Lentils – Ksh 37 or ¼ kg green grams- Ksh 22
4 Eggs at Ksh 40
1 kg of assorted vegetables ( kale, cabbage, traditional veggies) – Ksh 30
1kg Pawpaw – Ksh 50 or ½ kg mangoes – Ksh 14.
¼ kg oranges- Ksh 12 or ¼ kg bananas – Ksh 24. An orange can be divided by 4 and each member can get a slice. If this is the case, the ¼ kg of oranges could be distributed over 4 meals.
The prices listed are based on the latest surveys by Soko Directory and Farmers
Market Kenya and represent the current cost of foodstuffs in the Nairobi
market. Prices could fluctuate in different locations.
An effective nutrition program should meet the dietary needs of your employees. It’s not just about giving people food. The food should be healthy. A common misconception is healthy food is expensive. This is not necessarily true. So strive to provide employees with affordable but healthy food. You also need to ensure the food is safe and is distributed in a manner that prevents crowding to mitigate Covid-19 risks.
The company is the most effective vehicle yet in managing and controlling modern business enterprise. Other forms of organisation also maintain this goal, but most business is transacted via companies. In fact, the company pervades economic and social life all over the world, because of the advantages it enjoys over other forms of organisation. Companies can be classified based on their mode of incorporation, the liability of its members as well as the number of members. In this article we’ll look at the main classes of companies and their advantages.
CLASSES OF COMPANIES: COMPANIES LIMITED BY SHARES (LLC)
In this class of company limited by shares, the company has full should it go into debt. ‘Limited by shares’ means that the liability of shareholders to creditors of the company is limited to the capital they originally invested. The shareholder’s liability is only the amount unpaid of their shares. Companies limited by shares end with the word ‘Limited’ e.g. East Africa Breweries Limited (EABL), Kenya Airways Limited etc.
limited by shares may be Private or Public.
companies have no authorised minimum share capital and member’s rights to
transfer shares are restricted. Private companies prohibit invitations to the
public to subscribe for shares in the company. A private company is only required
to have one director and it can be formed with only one member.
companies allow their members the right to transfer their shares in the company
and allow invitations to the public to subscribe for shares in the company. A
public company must have at least two shareholders and at least two directors.
advantages of a company limited by shares are that they allow for multiple
owners of the company (shareholders). Additionally, in the event of
liquidation, the financial liability for the shareholder is limited to the
value of their shareholding.
CLASSES OF COMPANIES: COMPANIES LIMITED BY GUARANTEE
In a company limited by guarantee, the liability of its members is based on the amount the members undertook/promised to pay to the company in the event that the company is unable to pay its debts or goes into liquidation. This company does not have any shares or shareholders but is owned by guarantors who agree to pay a set amount of money towards company debts.
limited by guarantee are most commonly used as the structure for social
enterprise organisations such as clubs, Non- Governmental Organisations (NGOs),
charities, cooperatives and residential property management companies.
main advantage of this company structure is that it is a separate legal entity
from its owners and they are protected by limited liability. This means that
the company can sue or be sued in its own name and that the company is
responsible for its own debts and not its members.
CLASSES OF COMPANIES: UNLIMITED COMPANIES
unlimited companies, there is no limit to the liability of its members. This means
that the members have unlimited obligation to meet any insufficiency in the
assets of the company in the event of the company’s liquidation. This form of company is mainly formed for the
purpose of holding stocks, land or property with no likelihood of incurring
An advantage of this form of company is that the unlimited nature of its liability allows for careful risk management. This is because the owners can suffer substantial loses if things take a wrong turn.
Deciding on the form your company should take can sometimes be challenging. However, this doesn’t have to be the case. If you’ looking to start a company, consider your company’s business form, purpose and the potential liability of its members. Hopefully this article will provide you with some clarity so that you can make an informed decision for your company.