I don't think they should. There are few circumstances in which any employee is genuinely going to have a major impact on the company's success, and in those circumstances it's appropriate to offer equity. If you're employee number 2, it's probably appropriate. If you're an EVP with total P&L and strategic control of a major business unit, it's probably appropriate. Generally, it isn't.
There's no reason for the owners of the company to give up any economic interest to people who can't directly influence outcomes. There are too many things that have to go right between a rank-and-file employee doing something right/well and their equity being valuable to them: the entire chain of command, whether the company has the resources to execute well, whether the company's suppliers and partners come through, whether the sales force is compensated properly, whether fads and trends in the market are favourable, macroeconomic conditions (both natural and man-made) and when all's said and done and the quarter's numbers come in, whether Wall Street analysts are in the mood to drive up the company's stock price (if the company is private, add in whether the investors want to go public and the market for IPOs). Conversely, the company can be lucky even if most of its employees are deadweight; you end up rewarding a lot of people for nothing, and those who actually did something will resent how much wealth was transferred to noncontributors. People aren't stupid; they know all this. Having equity doesn't make them feel more empowered, it makes them feel less so: it's just one more part of their economic lives they can't control. And for that reason, equity doesn't operate as an effective incentive, doesn't make people feel valued, and I would challenge anyone to prove that it improves outcomes for the company's owners.
With a few fairly obvious exceptions, the overwhelming majority of your employees are much more worried about (1) keeping their jobs and (2) bringing home more cash than about some pie in the sky payday that will almost certainly never come. If you want to reward someone for a job well done, give them a bonus or a raise. If you want your company to be seen as a great place to work, don't do layoffs; you're the capitalist, you take the risks. When things go well, you pay a market wage for labour and keep the rest; when things go badly, you should pay a market wage for labour and take the loss. You're the one making the decisions that led to things going badly; if you don't like taking the loss, make better decisions. If your employees wanted to live or die based on whether a company succeeds, they'd be founders. They're not; you are. Offering equity helps no one; it costs you money and control if things go well but, again with a few obvious exceptions, doesn't help you attract or retain better people. If you want to offer people something they'll appreciate, offer them a secure job for satisfactory performance and above-market pay for above-market work. Those who so desire can use that pay to buy their own stock or lotto tickets.
There's no reason for the owners of the company to give up any economic interest to people who can't directly influence outcomes. There are too many things that have to go right between a rank-and-file employee doing something right/well and their equity being valuable to them: the entire chain of command, whether the company has the resources to execute well, whether the company's suppliers and partners come through, whether the sales force is compensated properly, whether fads and trends in the market are favourable, macroeconomic conditions (both natural and man-made) and when all's said and done and the quarter's numbers come in, whether Wall Street analysts are in the mood to drive up the company's stock price (if the company is private, add in whether the investors want to go public and the market for IPOs). Conversely, the company can be lucky even if most of its employees are deadweight; you end up rewarding a lot of people for nothing, and those who actually did something will resent how much wealth was transferred to noncontributors. People aren't stupid; they know all this. Having equity doesn't make them feel more empowered, it makes them feel less so: it's just one more part of their economic lives they can't control. And for that reason, equity doesn't operate as an effective incentive, doesn't make people feel valued, and I would challenge anyone to prove that it improves outcomes for the company's owners.
With a few fairly obvious exceptions, the overwhelming majority of your employees are much more worried about (1) keeping their jobs and (2) bringing home more cash than about some pie in the sky payday that will almost certainly never come. If you want to reward someone for a job well done, give them a bonus or a raise. If you want your company to be seen as a great place to work, don't do layoffs; you're the capitalist, you take the risks. When things go well, you pay a market wage for labour and keep the rest; when things go badly, you should pay a market wage for labour and take the loss. You're the one making the decisions that led to things going badly; if you don't like taking the loss, make better decisions. If your employees wanted to live or die based on whether a company succeeds, they'd be founders. They're not; you are. Offering equity helps no one; it costs you money and control if things go well but, again with a few obvious exceptions, doesn't help you attract or retain better people. If you want to offer people something they'll appreciate, offer them a secure job for satisfactory performance and above-market pay for above-market work. Those who so desire can use that pay to buy their own stock or lotto tickets.