High-performing employees are often the most valuable asset in most companies. Customers, products, technology, inventory, and many other assets come and go. A company that cannot hold onto its best employees, however, likely cannot grow.
Yet ironically, few companies take any formal steps to minimize the risk of losing top employees. Sure, you pay your best employees well, and presumably have a great culture and work environment. But your competitors can offer the same incentives. To truly hold onto your best people, consider tying them to your company with handcuffs made of gold.
Golden handcuffs is a generic term describing a wide range of programs that share one core purpose: to incentivize top employees to stay with your company for the long term.
There are many types of programs:
- incentive compensation plans
- stock options
- phantom stock
- stock appreciation rights
- synthetic equity programs
- share bonus plans
- and more
Making things even more confusing, each of these types of programs have variations in their design and operation. This complexity makes it difficult to approach these programs and select a plan design that best fits the situation.
However, learning about golden handcuffs programs is worth the effort. They offer a unique combination of advantages and benefits that can help your company reduce risk, propel growth, and maximize value at exit.
Originally published on isemag.com April 1, 2021