Securing Your Key Employees
If you’ve been in business for a while it’s likely you have at least one key employee who knows your business and customers well; a person or people
you rely heavily upon and to whom you owe some measure of your success. Whether you’re selling your business or passing the day-to-day management to a hand-selected successor, these key employees will be an important resource and can ensure the continued growth of the company. When planning to sell or transition away from your business it pays to keep these key employees engaged in the business and active participants in the process of passing the torch.
It’s always best for a business owner to lay groundwork as early as possible in order to keep key employees engaged in the event of a sale or transition of ownership, and there are many ways you can plan for that eventuality. If, however, you find yourself without a plan in place but in need of a short-term solution, there are still sound strategies for keeping your staff happy and on board with an imminent change in leadership.
One of the most effective ways to secure those key employees is to create a Retention Bonus plan. This plan should be completely transparent, with all details known by the seller, employee, and the incoming owner or manager. Although a Retention Bonus is often divided in two parts, depending on the needs of the business, it could have multiple stages. In a typical arrangement the first bonus is paid to the employee on sale of the business, the second portion of the bonus is paid only after the employee has stayed with the business for an agreed upon amount of time after the sale is final.
As always, we recommend talking with your advisor and team of professionals before committing to any specific strategy, but hopefully this information has you thinking about who is critical to your business’ continued success and how to keep them on board in the years to come.