Retaining Key Employees
We’re all aware that a motivated and settled workforce is an essential part of a successful business. This is becoming more vital as profit margins are challenged in this competitive and global environment.
Investing in employees throughout the organisation will have a positive impact on its financial results. The investment may take any number of forms and will vary depending on the nature, size, sector and culture of the business.
Employers should consider which of the following would engage their team:
- • Remuneration strategy - pension contributions, medical benefits, bonuses, childcare, holiday entitlement and gym membership
- • Flexibility - hours, choice of benefits, location and remote working
- • Technical - training and qualifications
- • Career progression opportunities - mentoring, development and optimising potential
Being an ‘Employer of choice’ will reap rewards in:
- • Improved client service
- • Better productivity
- • Opportunities to plan for succession, promotions and growth
If ignored then the impact is likely to result in increased staff turnover which is costly in both time and money.
Another area which can have a significant impact on the commitment and motivation of employees is share ownership. A number of schemes exist which are divided between approved (those which have HMRC approval) and unapproved (those who don’t).
In this article I focus on a popular example of an approved scheme specifically targeted towards SMEs called the Enterprise Management Incentive scheme (EMI). Essentially this is a tax efficient mechanism for employees to participate in the growth of the company.
EMI schemes can be very helpful in attracting as well as retaining key employees where the company is growing and cannot yet compete on salaries with more established entities. It’s an alternative way of rewarding employees for their efforts. The schemes are usually structured to entice employees to stay for a defined period of time in the knowledge they will benefit at some future date if the share value increases.
The schemes are flexible and can be tailored to the needs of the entity subject to meeting certain qualifying criteria such as hours worked and percentage holding. The right to exercise the options can be linked to performance or a future sale of the business.
Ultimately a contented and healthy workforce which feels valued encourages a positive, creative and ‘can do’ mentality which promotes ownership and a sense of responsibility towards customers and other team members. This should lead to reduced sickness, staff turnover and better customer delivery. This in turn leads to growth and financial rewards for all.
Date: 15th May, 2015
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