Over the last decade or so I have had the great pleasure of working closely with a significant number of business owners; both closely held companies as well as larger companies. What I have learned is that all successful companies seem to have several common denominators: they all have a very clear vision of what they are looking to accomplish, a strong mission statement, specific goals and objectives, and a well-thought-out action plan. However, they also profess that their success was only possible due to highly competent and dedicated key employees whom they have managed to retain for many years as a result of favorable culture and attractive compensation and benefits.
Understanding how to structure discriminatory benefits for these valuable employees has been the key to their success with most closely held businesses attempting to mimic what the larger, publicly owned companies have done.
As a result of the pandemic, we have seen a wave of key employees seeking “greener pastures” for more attractive offers. As such, the need for properly-designed strategies to reward and retain key people has never been more important.
Ask yourself, is there any person or persons who, if they never showed up to work again, would affect your business? If you were closing down your business and going across the street to start a brand new one, who would you absolutely take with you? Is there any one person(s) who your life is better off as a result of working with them?
The benefits of properly designed Strategies to Reward and Retain Key People include the following:
It helps to retain key talent by providing supplemental cash and/or benefits not available through salary and short-term bonus schedules.
Executives can defer income taxes from a sign-on bonus.
Custom benefit programs can be put in place on a “pick-and-choose” basis; the company does not need to/can’t (in some circumstances) include all EEs.
Executive benefit programs are alternatives to above market increases to base and bonus cash payments.
Benefit payments are tax deductible to the company.
Income taxes to employees on benefits due can be deferred until distribution.
Distribution schedules can include lump sum or an installment schedule for more custom cash flow and tax planning.
For a more in-depth look at the type of programs that are typically used as well as some cases examples, please visit our website at www.strategiclifelines.com, scroll along the top of the site to Previous Webinars, and click on the webinar entitled Case Study: Strategies to Reward and Retain Key People.
If you have a case you might like to discuss further, please email us at kriasanne@strategiclifelines.com or scroll to the bottom of the web page and request a consultation.