Recruitment: The Talent Challenge
Finding and retaining key players has always been challenging for small businesses, but times have never been quite like they are right now. The “Great Resignation” or the “Big Quit” as it has been named is a trend that is touching every corner of the economy. The pandemic has allowed workers to rethink their careers and goals making the business of hiring as tough as it has ever been. So, what can you, the business owner, do to attract the right people, especially for your C-Suite?
Culture Matters More than Ever
Having a company culture that stands out has proven to be a big differentiator. A key reason that many people give for leaving their current positions is to find a new, more purpose-driven position, a place where they get more than a paycheck. Smaller companies have an advantage because they have less bureaucracy to make changes quickly, allowing them to create an environment that is more nurturing and attractive. Part of creating this culture is knowing how to get the word out through social media and industry channels; so, owners must also learn how to tell their story, their history easily and often, or hire professionals to help them. When speaking to candidates, remember they want to hear about your visions and goals for the company and how they fit into the company’s future plans.
Lifestyle and Flexibility
Control over time is important especially to millennials and the next entrants to our workforce, Gen Z. Smaller enterprises have the ability to offer the flexibility that is so critical to these age groups. Developing processes that allow management to maintain productivity but still provide the choices that employees need can be a great incentive when looking to attract talent. As the traditional 9-5 workday becomes less attractive to many candidates, allowing greater flexibility for working hours, offering remote working opportunities, and creating incentive programs may be a positive way to spark synergy in the company.
Equity Incentives
Providing the opportunity for stock ownership is one of the most motivating perks that a closely held business can offer to a C-level employee.
Advantages of granting equity include:
- Tying the key employees to the company by making them part of the company’s ownership;
- Some types of equity plans, such as stock options, require employees to pay for ownership, thus investing themselves, quite literally, in the company;
- Stock ownership gives employees a strong incentive for increasing the value of the company and therefore increasing their own benefits;
- Employers in certain industry sectors, such as technology, must grant equity incentives to remain competitive with their peers.
For owners, giving equity also has its drawbacks including giving employees the right to see books and records and be privy to future decisions of the company. Providing equity requires legal, accounting, human resources as well as management time and effort to determine the right plan, identify the key employees, value the company, and implement the plan.
As is true of any management decision, the decision- maker needs to consider the individuals that are being targeted, the company’s projections, and its overall business plans before selecting the plan that is best suited for its needs. There are several ways that ownership of company stock can be gained by an employee. A few of those include:
- Incentive Stock Options (ISOs)
- Restricted Stock Units (RSUs)
- Employee Stock Ownership Plan (ESOP)
- Worker-Owned Cooperative
Companies can also consider instituting a blended plan that mixes cash and equity incentives to get the best benefits of each.
Regardless of the type of plan that may be implemented, establishing an incentive plan for employees requires time and effort by the owners to ensure the incentives yield the intended result and retain the right employees.
Starting a business is hard but maintaining it and retaining talent often requires a completely different set of skills.
Business Insights is hosted by the Law Firm of KPPB Law (www.kppblaw.com).
Sonjui L. Kumar is a founding partner of KPPB Law, practicing in the
area of corporate law and governance.
Disclaimer: This article is for general information purposes only, and does not constitute legal, tax, or other professional advice.
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