The Key to Retaining Sales Talent
Good salespeople are worth their weight in gold. That's why it pays to reward them with a pair of golden handcuffs.
Your salespeople are one of your most valuable investments. You recruit them, train them and trust them with your valued customers. You depend on them to keep your business growing.
So what happens if they leave? Even worse, what if they're lured away by one of your competitors, along with your accounts? That would be a real blow to your business. That's why it's smart to bind them to you financially.
There are several ways to do this. One solution is the non-compete contract, which we discussed in last month's column . The problem with non-competes is that they're essentially negative in nature. They're also penalty-driven, and no one likes the prospect of punishment.
Golden handcuffs offer a more positive alternative. Instead of a financial penalty, they represent a potential financial reward. If salespeople leave the company prematurely, they lose their chance to reap the reward.
The best golden handcuffs are custom-fitted. In other words, you need to find--and hit--your salesperson's personal hot button for the handcuffs to really hold.
The solution can be simple or complex. A simple plan, for example, would be to lease a car for your salesperson. The trick is, you place the lease in his or her name. You make the monthly payment, but he or she has the legal obligation. If the employee leaves the company, your payments cease. At that point, the monthly payment--or the disposal of the vehicle--becomes his or her problem and responsibility.
What if cars aren't your salesperson's thing? You can do the same thing with tuition reimbursement.
Or how about something more complex and long-term, like a deferred compensation or salary continuation plan? You have many choices, from a straightforward deferred compensation/disability agreement to some form of retirement trust.
Remember, you don't necessarily have to fund the program with current dollars. You do have to be ready to meet your financial obligation, however, assuming your salesperson fulfills his or her part of the agreement. No matter how you structure it, if the salesperson leaves before the agreed time, he or she forfeits all or part of the plan benefits.
Another idea: What some employees really want is equity in the company (which has the additional bonus of motivating performance). In that case, reward them with market equity stock or allow them to buy it, perhaps at a discounted rate.
If you don't welcome the thought of a minority shareholder, you can even create a phantom stock program. In this case, the employee is not an actual owner. However, he or she does receive a payout if a dividend is declared, when they retire, or if the company is sold.
Of course, whatever plan you craft, you'll want to work it out with your attorney and accountant. But otherwise, when it comes to creating golden handcuffs, the possibilities are limited only by your imagination--and by whatever strikes gold with your salesperson.
Ray Silverstein is the president of PRO: President's Resource Organization , a network of peer advisory boards for small business owners. He is author of two books: The Best Secrets of Great Small Businesses and the new Small Business Survival Guide: How to Survive (and Thrive) in Tough Times . He can be reached at 1-800-818-0150 or firstname.lastname@example.org .