02 Jul Entrepreneur Tip of the Week: Compensation Agreements that Motivate Your Employees

You want the absolute best performance from your hires, and I believe that this happens only when your employees feel satisfaction working for you. There can be many reasons why employees leave you. Last week Louis Efron wrote in Forbes magazine about the “Six Reasons Your Best Employees Quit You.”* So how do you retain the people who not only have the necessary skills but also the right personality and attitude? Structuring compensation is one way to help you hire and keep the best employees for your company.

The best way to find what motivates each employee is to simply sit down with them. Bonuses or stock ownership often attract the employee to stay. Providing proper benefits packages can also be meaningful. But offering one or another across the board may not make sense. Some employees really want that brass ring and are willing to sacrifice some current income for stock or options. For others, paying their bills is what really matters and they’d rather have a bigger raise than stock that may benefit them years hence. Do your best to get a sense of what matters to individual employees that are key to you. In an entrepreneurial environment, one size compensation does not necessarily fit all.

Remember that “worker bees” who do not generate revenue tend to appreciate a small gesture of equity ownership more than others. “Rainmaking” employees who bring in business may seek greater in cash bonuses but also want to get a taste of the back end. As rude as it may seem, focus your energy on structuring compensation right for the key employees who are less expendable.

*Visit http://www.forbes.com/sites/louisefron/2013/06/24/six-reasons-your-best-employees-quit-you/ to read Efron’s full article.