As a business owner, especially when operating a small company, it’s common to find a star employee that perfectly complements your vision – exceeding expectations, getting the job done perfectly and making a positive impact on your business.
It’s only when you recognise that employee that the fear of losing them becomes a reality.
And the last thing that you want to do is have to find someone else to replace that person, as it can become costly, time-consuming and often difficult to achieve.
So how do you keep them happy? How do you retain them for the long-haul?
While locking them in a room and hoping for Stockholm Syndrome to take its course isn’t exactly an option – arresting them with a sleek pair of golden handcuffs just might be.
Value Is In The Eye Of The Entrepreneur
In a lot of the smaller businesses that I deal with, I come across clients that become incredibly dependent on one, or a few key members of staff. And it inevitably leads to a fear of loss, as they believe there’s a huge risk in losing any of them.
What often tends to happen is that these key employees begin to recognise their own value and the impact that they have on the business. This leads to them either asking for more money, or some kind of guarantee that their hard work will benefit them far more than just the salary that they receive.
And it’s at that moment when business owners make the mistake of giving away or selling shares to a star employee (especially in the early stages of starting their company).
More often than not, this comes back to bite them in the ass. After a few years, the realisation kicks in that giving away or selling shares early-on was a crap decision. What ends up happening is that you give them shareholder rights and create complications if you ever wanted to sell your business at a later stage.
So before jumping the proverbial gun, you need to first ensure that this person is capable of being a good partner, not just a good employee.
Just like in dating, you need to know if they fit the role of being a good parent, a caring partner and whether or not there are any red flags to be cautious of. The same applies to that star employee – you need to work with them for a long enough time before offering them a stake in your company.
If you’re feeling pressured to make promises or provide them with a reason to stay – then I’ve got some really great tricks for you.
Arrest Their Attention With Golden Handcuffs
Being a business coach means that I always have (or find) a solution to the problems that business owners have to face.
That being said, dealing with a situation like this can be easy if you have the right tactics to approach the situation:
Profit-Share Scheme: With this option, you give the employee the opportunity to earn more based on the success of the business. If the business makes a great profit, then the employee is rewarded with a piece of that profit. This can come in the form of a percentage (say 10% of the year-end profit) or even a flat bonus.
This method works great, because harder work results in more benefits for the employee. The performance of your staff is often affected by how they feel about your company – so by sharing a piece of your profits, there will be increased levels of trust, productivity and efficiency.
To make this work, you need to be transparent around the finances of the company and clearly set the expectations that need to be met in order to benefit from the profits.
With this approach, it’s important to note that small business owners don’t always feel comfortable with sharing how much the company is making – that sort of transparency often results in staff becoming less productive, as they feel they deserve more.
Ghost Shares: This method is usually based on an agreement between the employee and owner that gives them all of the benefits of being a shareholder, without the risk or the decision-making power of actually being one.
By using this approach, you offer an agreement to the employee that will give them a percentage of the profits that are declared – as well as a cut of the value of the business, should it sell. This can also extend to a seat at the management committee, where they have the opportunity for their voice to be heard – which gives them a sense of belonging and involvement. However, in the case that they leave the company, they forfeit those shares.
Doing this works, because they believe that they will benefit from the business without feeling like a pawn. And by implementing this type of share agreement, you become aware of the type of person the employee is over time, allowing you to figure out whether or not they’re cut-out to be someone that you can open discussion around proper equity with.
One of the biggest benefits of the ghost share is that you’re able to move the business forward without relying on partners giving you the go-ahead.
Also Remember That…
You need to make it clear to these employees that profits will be forfeited if leaving the company before a pay-out; that these pay-outs are often only reflected annually or quarterly (based on performance reports); and that they ultimately affect the profits that the company receives.
Payments also don’t necessarily have to come in the form of straight cash, but can sometimes be used for education, vacations or things like retirement funds.
Ultimately, this approach will add value to the employee, their experience and the relationship that they have with the company.
Personally, I feel that the best approach to take is to dramatically increase the person’s salary. It not only says that you respect and need that employee, but that you’re willing to pay them more than any other business is – which will motivate them to stick around.
Either way, keeping your star employees just became a whole lot easier.
I happen to have a sleek, comfortable set of golden handcuffs that are waiting to embrace you:
While you might find it stressful to ensure that your business always moves in the right direction, that you are always making the right decisions for you and your staff, and that you keep focused on the ideal path to success – I’m here to tell you that winning just became a whole lot easier.
Based on the many clients that I’ve successfully coached, I know I can add massive value to your life. I know I can make you feel like a winner. I know that you’re ready to take the leap.
+2783 253 3339
Don’t waste another second thinking about it. Let’s have a chat.