New Zealand is a “nation of job-hoppers” according to Statistics NZ, which says half of earners have been in their jobs for less than 18 months. This has been a traditional aspect of the New Zealand job market for decades, so I take the idea of a “great millennial job-hop” with a grain of salt. I don’t know why we love to switch jobs; it could be tied to our love of travel or the fact that it’s relatively easy to find a new job. Whatever the reason, it can be a headache for employers. It’s hard to build a great sale-ready business when you’re having to replace your top people every year. It’s expensive and disruptive.
How can you help your best people stay? Obviously you need to treat them well, pay them properly and make sure their working environment is a pleasant place to be – easier said than done, but not the topic of this blog. What we’ve been working on recently with clients are long-term incentive plans for your top staff members. Each plan is tailored to the staff member’s experience, value and salary. There are bonuses, but they don’t only reward good work – they also reward years spent in the business. Team members build up incentives as they remain in your business. If the business sells, the built-up money is paid out in full – and if the business sells over a certain figure, they can earn even more. This helps make your team members strive towards building a strong and saleable business: there’s a big bonus in it for them if it succeeds.
We’ve been implementing this for two years for one client and one year for another client. Obviously it’s early days, but let me say that job retention for the people with long-term incentive plans is 100% so far. Obviously it requires an investment of time and money, but the true cost of replacing a good manager in your business is much higher than $10,000 or even $20,000. The longer your manager stays, the more valuable the work that person is doing. And those bonuses are a powerful way to show that you value that expertise and a fantastic incentive for your people to stop job-hopping.
Planning to sell in five years? Now is the time to put this type of long-term plan in place. If you want to know how to keep your top people, give me a call and I can help you put this in place.