Business Planning
Executive Compensation: Keeping Competitive
In order to hire the best in your industry, develop a compensation plan that rewards key employees. Learn how here.
In order to hire the best in your industry, develop a compensation plan that rewards key employees. Learn how here.
As a company owner, you may have what many potential employees would characterize as the “dream job” that includes ideal working conditions and a competitive salary base. But staying competitive in the marketplace for exceptional employees may mean that you will need to offer especially skilled people something above and beyond the basics. In other words, creative employers should offer talented people more than enough incentives to keep them loyal to the company and willing to stay for the long haul. It is essentially a smart business strategy.
Employers are of course obligated to pay their employees for the work they perform. But when talented key workers are offered a job, they are frequently also offered a package of executive benefits—everything from special life insurance policies, long term disability insurance, and retirement plans—that can increase the chance that a sought-after individual will take a particular job and/or that a current employee will stay with the company. But what if the employer has not kept up with similar companies and no longer offers a competitive executive compensation package? The employer may be at risk of losing the chance to hire the best employees and may find his or her current employees feel under rewarded. This might result in low morale and reduced productivity.
Employers need to routinely examine their executive compensation plans. The needs of their employees can change over time, and the benefits themselves can cost the employer and/or the employee more or less over time. A company needs to find the right package of executive benefits that both fits its budget and appeals to its employees.
In the end, planning a sound executive compensation package may require having a strategic meeting with employees and benefits advisors. The availability of additional compensation can also be an attractive incentive for less-skilled employees who have yet to grow into a specific position of value to the company.
The Future of Your Business: Succession Planning
Find out how to protect your financial independence and the future of your business with a comprehensive succession plan. Start here.
In order to hire the best in your industry, develop a compensation plan that rewards key employees. Learn how here.
Find out how to protect your financial independence and the future of your business with a comprehensive succession plan. Start here. If you’ve developed a successful business through years of hard work, you may want the business to continue in some form in the event of retirement, death, or disability. Perhaps you want a family member to inherit and manage it, or you want the family to own the business but have it be run by a trained management team. Perhaps you want to sell the business and make sure that it sells at a fair value and is run well. There’s a lot to consider: to make sure everything will run smoothly at the time you leave the business for whatever reason, you need to prepare what is called a succession plan.
By their very nature, these plans are fairly complicated: so start thinking about gathering together your professional advisors, such as your business attorney, your estate planning attorney, your business accountant, and your financial advisor.
One of the most important decisions you’ll need to make is choosing who will take on the responsibilities of ownership and management. It may be that you have already have a great management team, and that team can continue to successfully run the business. Or you may want to draw up a detailed job description and hire your successor. If family members will be running the business, look at the different skills of family members and discuss with them your needs and their interests. Once decisions are made about who will succeed you, whether you keep the business in the family or sell it, you need to train the successor, to ensure the continued success of the business.
If you plan on selling the business, you will need to valuate it—determine what it’s worth. This again is a complicated process, and you’ll have to draw on the expertise of your team of advisors to get it right. And those advisors will shepherd you through the other complexities of planning a business succession: for example, setting up a buy-sell agreement and funding the buy-sell with life insurance. The key to success is to create a comprehensive plan now that addresses all eventualities.