Employers invest so much time and effort into (a) finding and hiring the right candidates for the team, and (b) developing those individuals to work at their most efficient levels for the company. Let's face it, it can take years to get a company up and running effectively, and certain key individuals play a huge role in making that happen.
You don't want to lose them.
While I firmly believe that everyone is replaceable, some employees are just harder to replace than others because they add so much value.
Give them an incentive. One option is to tie their salary to the success of the company.
Instead of traditional stock options (which could make it difficult down the road should the employee leave the company for any reason) business owners may want to consider offering certain individuals profit interests.
Not only would it build loyalty and increase an employee's desire to see the company succeed, but the company owners would retain all of the equity interest.
A bit simpler than stock options, profit interests are typically tied to employment and end upon the employees departure. This eliminates employers dealing with minority shareholders and the host of issues that may arise from them.
Alerding Castor Hewitt, LLP is an information technology law firm that has helped dozens of start-ups with their business and legal needs, including documentation for profit interest agreements.
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