If you run and own a company, you know that it can be a real challenge to figure out the compensation package for your management team.
Sometimes, your management teams are family; sometimes they’re not. Sometimes you may want your management team to become stockholders.
Oftentimes if you build a compensation plan that is too rich and performance isn’t associated with the money the management team is making, then the company can begin to drift financially.
It’s important to do a study to determine the right type of compensation plan for your management team. For example, do you want to have a low base with high bonuses based on profits and performance? Or do you want to offer a higher base with extra benefits for your management team that you don’t offer to all of the employees in the company?
It can also be very important to make sure that you have longevity in your business, stop turnover, and make sure that the people who are good stay with you until they retire. Often, people don’t leave your company because they don’t like working for you or they want a better salary. Most people leave because they can’t figure out how they will build enough wealth to be able to retire.
So, while people may be looking for a better salary, they may be more focused on a job that offers more perks, like stock options, bonus plans, deferred compensation packages, or salary continuation packages. Salary continuation packages provide an extension of their salary once your employees hit retirement. Most people can’t retire on their 401(k) plan, so providing extra benefits for your management team can be very important.
Another reason extra benefits are important is that you may want to transfer your company on to your children. In that case, it’s going to be really important to hang on to that top management team. Even if they aren’t going to get any stock in the business, setting up something supplemental to provide extra wealth for that group will motivate them to stick around.
Ultimately, it’s incredibly important to get a study done on your compensation plan for your management team. We will look at the long-term objectives for your company, who you need to keep, and who you need to recruit in order to have a successful business. We will take all of that information into account and help you upgrade your compensation package so that you can hang on to (or recruit) that great management talent.
If you have any questions about compensation packages, please don’t hesitate to give me a call or send me an email. I would be happy to help you!