How to Keep the “Lebron James” of Your Business From Jumping Ship
Posted in Closely Held Businesses and Business Start-Ups on July 19, 2010
Every business--big or small--has one or more key employees considered "MVPs" by ownership. As a business owner, how do you protect your business from having the Lebron James of your team from leaving you when you need them the most? After all, most employees in Virginia are at-will employees who can leave (or be asked to leave) any time for any reason, right? While that is certainly true, there are a variety of strategies a business owner can pursue to increase retention rates for key employees:
1. Strategic use of written employment agreements with the "MVPs" of your business can provide a greater degree of certainty over the term of employment and the circumstances under which the employment relationship may be terminated. The use of a written contract can help both parties better plan ahead for thr future and strengthen their relationship.
2. Creative use of equity and "equity-like" compensation for key employees can significantly promote employee morale, increase loyalty, and effectively incentivize key employees by better aligning their interests with those of the company. For owners who are apprehensive about diluting ownership and taking on a business partner, a phantom equity program can offer key employees the economic equivalent of ownership in the company without the associated legal rights of being an equity owner. For an MVP whose motto is "just show me the money," a phantom equity program might be effective.
3. Carefully drafted non-compete and non-solicitation agreements can encourage key employees to stay put (albeit in somewhat negative fashion) or at least limit the potential damage they can do to your business if they jump ship for a competitor.
These are just a few ideas to consider, all of which should be tailored to the specific facts and circumstances of your situation and structured with assistance from legal and tax counsel.