Transform your employees into growth partners. Build a high-performance culture with a strategic incentive plan.

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Transform your employees into growth partners. Build a high-performance culture with a strategic incentive plan.

By , March 8, 2024
Group of business workers working together. Sitting on desk speaking at the office

As a small business owner, you face serious post-pandemic workforce challenges – including the Great Resignation, that ongoing phenomenon where employees have been leaving their jobs in unprecedented numbers.

A Deloitte study in October 2021 found that 73% of CEOs anticipated the work shortage would disrupt their businesses over the next 12 months, 57% believed attracting talent is among their company’s biggest challenges, and 35% already expanded benefits to bolster employee retention.

It’s also a time where companies are poaching top talent from competitors – and where small businesses are desperate to fill key employee roles.

The demand for incentive compensation has never been greater. That’s why you need a smart incentive compensation strategy to make your company stand out from the crowd – to attract, empower and keep top talent in order to grow your business.

Strategizing incentive pay: a job for the CEO, not HR

Most CEOs don’t want to get involved in micromanaging pay scales and wage increases. They expect their HR department to do that.

But there are certain questions that only the owner or CEO can properly address, such as:
How well is the business doing when it comes to attracting top talent?

  • How effective is the company in retaining key producers?
  • How strong is alignment between the company’s vision, business model and strategy, employee roles and expectations, and the financial rewards for employees who meet those expectations?
  • Is the company able to improve ROI on its compensation investment through increased profits due to employee productivity?
  • Is the business nurturing a culture of high performance and confidence?
  • Are all stakeholders able to benefit from the wealth generated by the business?

While you can still use your human resources staff to help you implement your strategies, make no mistake – you must lead the way in creating a financial vision to grow your company. Approaching pay design strategically is the only way such a vision can be realized.

What NOT to do: offer ownership in your business

When losing top talent, a business owner’s first reaction is often to offer an employee ownership in the company. But that’s the last thing you should do – as many business owners must turn around and buy it back. A better approach is to create “synthetic equity” that looks and feels like ownership without giving away legal rights to your business.

We help our clients explore long-term approaches such as a phantom stock plan, which gives selected employees (senior management) many of the benefits of stock ownership without actually giving them any company stock. Another option is offering Stock Appreciation Right (SAR), an award which provides the holder with the ability to profit from the appreciation in value of a set number of shares of company stock over a set period of time.

These and other options are designed to drive performance and increase wealth building for key employees. Ultimately, these will increase the value of your company, because when you align your employees’ interests with your own interests, you reap significant rewards.

Get help with your compensation plan via our partnership with VisionLink

As competition for top talent intensifies, you need strategies for both short-term and long-term incentive strategies – without giving away actual equity in your company. While larger corporations have long had compensation consultants, the smaller business market has not.

That’s why Succession Plus US has partnered with The VisionLink Advisory Group, a firm specializing in incentive compensation for small to mid-market companies.

VisionLink is now an extension of our LBA team, helping you design, implement and administer compensation plans for your key employees.

Consultants from VisionLink work with your directly, asking questions to determine your objectives, how many employees you need to impact, what are key performance metrics in your business, and how can you tie that to performance of your key people.

“We love helping Succession Plus US’ clients to envision and create compensation strategies that align with their business strategies,” says Tom Miller, president of VisionLink. “When compensation is done right, performance improves, and a company is better positioned to win the talent wars. Our mission is to help businesses transform their employees into growth partners. A well-designed compensation program demonstrates a company’s commitment to its key employees while producing a positive, measurable return for shareholders.”

At Succession Plus US, we are here to help you align your succession or exit planning with the growth opportunities you’re seeking in your business – and tie them directly to the behaviors of your key employees.

MarkDorman

Mark Dorman

President & Managing Director of Succession Plus US

CFBS, CEPA, AIF, ChFC

Mark Dorman is recognized as an industry leader for his work with small and mid-sized businesses. A Certified Exit Planner and Certified Family Business Specialist, he has counseled more than 100 privately held businesses.

In a career spanning 35+ years, Mark has purchased, founded, and exited businesses of his own. He published numerous e-books on exit planning and hosts the popular Finish Big podcast.

Mark was president of Legacy Business Advisors before establishing Succession Plus US.

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