• Chris Reel

The best way to compensate A-Player employees without breaking the bank.


Everyone knows that bringing on and keeping A players in your business is a key component to growth and profit. But how do you achieve this without breaking the bank to match the salary expectations of these A players?


You're at a point in business where you know that in order to scale the way you want, you'll have to bring in some extra hands. You also know that these extra hands can't just be anyone. You want the best of the best. But how do you do this without breaking the bank?


One way is to provide a standard profit share to the employee's compensation plan.


This is pretty standard, and basically spells out that the employee will take a piece of the pie of profits at the end of the year, or quarter, or however you want to structure it. The problem with this approach, besides the fact that it's too vanilla, is that it lacks one key component that promotes the growth of the company.


Incentive.


You have to incentivize these newcomers in a way that keeps them motivated and rewards them for their hard work.


My favorite way to do this is through what's called gain sharing.


Gain sharing is a way to compensate employees by providing them with a piece of the profit that they ultimately have a direct impact on, or that is directly related to their activities that ultimately result in reduced expenses, increased productivity, or gained revenues.


In practice, this might mean that a salesperson is tasked with selling a particular product and based off of the increased revenues generated by that salesperson's efforts beyond the revenues previously obtained by the company, they get a percentage. With gain sharing, it is directly related to the action taken by the employee.


It's a great way to determine if they're really motivated and really keen on bringing both their bank account and the company's bank account up. Now, how you set this up will come down to carefully crafted language in their employment contract. Make sure that the language accurately spells out how the employee gets a piece of the increased profit, so long as they were involved in that increase.


The verbiage and legal construct of this provision is crucial, because without a firm understanding between both you and the employee, there's the risk of disagreement and dispute and we all know how that goes. Explore gain sharing if you're looking to add in a key employee to your team to keep them hooked, and also maintain their motivation. You might be pleasantly surprised with the outcome.

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