Few business owners will take anextended vacation much less throttleback without leaving behindmanagement capable of running thebusiness.No sophisticated buyer will seriouslyconsider acquiring a company that lacksa good management team.Many, if not most, businesses are soldto key employees.Transferring a business to children isespecially risky in the absence of keyemployees who will remain with the newownership.Each of the scenarios above highlights anowner’s need for motivated employees whostay with your company after you leave it. ThisWhite Paper describes how you can motivateemployees through various key employeeincentive programs.The beauty of a well-designed key employeeincentive program is that as your employeesmeet their physical and financial goals, youattain your Exit Planning goal of making your company more valuable and, perhaps, moremarketable. And, of course, you are able toexit!If there was ever a case of “win-win” for bothemployer and employee, it is key employeeincentive planning.The first task in key employee incentiveplanning is to identify exactly who your keyemployees are. Most of your employeesdo not fit into the “key” category.Instead, they are attracted to your companyand motivated by the usual items: a pleasantwork environment, a stimulating job, goodwages and benefits, and job security.Key employees, on the other hand, act andthink more like you do. They want morechallenges and opportunities. They want toprosper and grow as the company does. Inshort, they behave like owners. You may havekey positions in your organizational chart.Make certain the persons filling those slots arekey employees.Keep in mind that people in key positions arenot always key employees. If employees do notrespond well to the incentive plans described inthis White Paper, it is questionable whether such employees truly are key. With theseguidelines in mind, let’s look at how to motivatethis small, yet vitally important, group.
CHARACTERISTICS OF AN INCENTIVEPLAN
A well-crafted incentive plan is one that doesmore than make both owner and employee feelgood. In fact, five criteria are present in a well-designed plan:The plan provides substantial financialawards to key employees. A potentialbonus equal to, at least, ten to thirtypercent of annual compensation, isnecessary to motivate an employee tomodify performance.Performance standards are specific.There must be determinableperformance standards such as certaincompany net income or revenue levels.
Joseph Associates International, Inc. www.BrokerChicago.com
Employee Incentive Planning White Paper