Are you at risk of losing key employees?
“As sophisticated as we are and as many technological advances as we have, people remain the most integral part of the workplace – people are the fuel for the growth engine … Retention has never been more paramount to a company's ability to succeed,” writes the author of a recent Inc. article “Hiring Isn’t Enough. Winning the Talent Game Starts With Retention.” Your key employees and managers are also a crucial part of a successful sale of your business. As we discussed in a previous article, keeping the management team in place to run the business is a top priority for potential acquirers.
Retaining your key employees is not an easy task in the current labor market. Let’s look at some things you should consider and actions you may take to improve your retention rate.
Who Are Your Key Employees?
First, you’ll need to determine who your key employees are, identify what’s important to them, and implement appropriate strategies to entice them to stay with your company. Start by identifying team members who are essential based on their experience, indispensable knowledge, relationships with employees, vendors or customers, responsibility for revenue, or their involvement with critical projects. Be sure to consider who you may want to succeed you as CEO and who an outside buyer will see as integral to the successful transition of ownership.
Understanding Your Key Employees’ Perspective
Once you determine who your essential employees are, you will need to figure out what you can offer to keep them in place. It’s important to understand the motivations of your key employees and the potential risk of them leaving.
Think about:
- What is most important to them such as: financial compensation, acknowledgement, new challenges, work/life balance, security in retirement.
- How long they have they been with your company.
- Where they are in terms of their career, i.e., just starting out in their career or close to retirement.
- Whether they have dependent family members.
- The demand for their services in the marketplace and whether you are compensating them competitively.
It’s Not Just About the Money
In addition to addressing monetary compensation, the Inc. article suggests creating a sense of “workplace FOMO” (Fear of Missing Out) by:
Working on company culture – Rethink your work environment to reflect employees’ changing needs and desires.
Conducting “stay interviews” – Rather than waiting to debrief at an ‘exit interview’ when it is too late, use ‘Stay interviews’ to gauge employee satisfaction, determine their motivations and right-size their compensation and benefits if needed.
Continually developing your managers – Invest in training and development to empower your managers and make them more autonomous. Remember buyers don’t want the business to be dependent on you.
Special Considerations If You Plan to Sell
The sale of a business can be a time of uncertainty for employees. And if not handled properly, key employees may start to worry, begin looking for other opportunities, and/or decide to leave in order to protect themselves.
Deciding whether or not to stay with your business during a business transition is a big decision for an employee – especially in light of the current job market. There is certainly some risk in staying for them. If the company fails or is shut down, they could be out of a job. On the other hand, if the transaction is successful with the right compensation plan in place, they could potentially enjoy numerous benefits from the sale, such as stock options, new career opportunities, a retention package from the buyer, and being part of the successful combined venture.
Proper planning and clear communication will be essential. You want to ensure that the economic and personal incentive to stay is made clear. Ensuring the retention of your key employees as part of your business exit plan is essential.
Stay tuned for our next post which will cover specific employee retention strategies you may implement for your key employees.
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