Perks & Incentives Many founders make the mistake of investing in a range of perks without asking their employees what would really make them happier at work. Beer fridges and bean bags won’t stop someone leaving if there are still unresolved tech issues and an unhealthy work environment, so don’t under-estimate the hygiene issues. Members agree that ad hoc rewards and spot bonuses work better than cyclical schemes because younger workers want more immediate recognition. A frequently highlighted tip is to ask for everyone’s feedback on what they would like if they could have something for free, for £10, for £50 and ‘money can’t buy’. This will help to personalise spot bonuses and make rewards more meaningful. It will also identify those more motivated by money, which will help when it comes to incentive schemes. The pros and cons of equity and option schemes are frequently debated by members. The main benefit of options over shares is that people (typically in the UK) lose the right to options when they leave whereas you have the complication of buying the shares back if people leave. These schemes are likely to be more appealing to older more senior team members than millennials who favour shorterterm incentives like status, salary and bonus. However, EMI options are usually chosen over bonuses to incentivise key staff because they are more tax efficient. Under EMI, gains are taxed at 10% while the income tax rate of up to 45% is applied to bonuses. Options are widely acknowledged by members as being a better retention tool for key staff than for driving higher performance. The consensus with any incentive schemes is to talk to your team about what motivates them and get a sense of what life-changing means before designing a package. Don’t make assumptions as they may not want an incentive scheme, just the right challenge and prospect for progression.
TALENT TACTIC:
Early Warning System “You have to be comfortable with the fact that people leave. People don’t stay for 10 years these days. If they choose to spend two or three years of their life with you, that’s amazing.” James Monico,
James Monico is co-founder of Cloudreach, an international cloud computing consultancy that operates across 8 countries with 400 people. After selling a majority stake to Blackstone, James has stayed on as NED and his co-founder has stayed as CEO. “We spent a lot of time mapping roles and encouraging people to apply for different positions in the business. We had a slightly covert initiative which we called the superstars programme. The leadership team would try to identify the top 10% of performers in the business, who we thought had the most potential, and we would take them out for lunch and talk to them. The idea was to identify any problems or concerns they had before they even started to think about leaving. Once someone’s thinking about going and looking for a new job, you’ve lost them. Even if you counter-offer and retain them it’s horrible and you’ll probably lose them anyway in the end. This programme has been really successful.”