It’s the worst! Your project has developed to the point where you’re about to build the working model and file the application for a patent or FDA approval. The scientist who is heading the project walks into your office and tells you she or he is leaving for another position at the company a half mile down the road. He or she has led a small team and doesn’t have a back-up.
Your attorney tells you the non-compete – assuming you had one – won’t apply since the job is not with a competitor. And today, it is likely the non-compete would not be enforced by a court in any event – plus the expense and time. You can “protect” your “secrets”, but you can’t force an employee to stay or not take the new job.
Too bad you didn’t have a strong retention reward program in place.
People come for the work challenge and leave for the money. You may have done it to others, and others likely have done it to you. If price is no object, you can usually hire the person you want. You can’t always keep them.
You should have a Retention Program in place. You can’t hold a person against their will. However, you can make it very expensive for them and, perhaps the new employer, if he or she leaves.
Retaining employees in the current economy, especially if they are millennials and even more so in areas where a new opportunity may be within walking distance, is a challenge. Retaining key employees, especially those with a wide reputation, is not only a challenge but can be difficult.
Is there a perfect solution? Probably not, but you can make them think twice even before looking for a new position or visiting someone at another company who they met on line or, perhaps, even in person at a gym, bar or restaurant (still happens occasionally).
MKA is known for its executive benefit retirement programs; however, in recent years, it has been important for us to design programs with specific and targeted intermediate rewards that work to keep people in place. With the portability of 401(k) plans and the generally low long-term value of 401(k)s against the earning ability of top notch staff, additional programs are needed.
MKA’s programs are designed and tailored to fit the needs for retaining specific key personnel. They can be tied to a number of years of service or completion of a particular project. These programs are promoted and implemented so that the participant or participants are constantly aware of the increasing value of remaining in continuing employment.
Depending on the needs of the organization, a program can provide both retention and “parachute” provisions. For example, in addition to a “penalty” for leaving early, a program can contain a fixed or employer option for accelerated payout if the employer terminates the relationship.
Payouts can be on a graduated or cliff vesting schedule. In addition to vesting, accruing benefits can be ramped up periodically to demonstrate recognition of increased value of the employee.
Funding these programs makes them tangible and visible. MKA has tax-favored methods of building programs and appropriate funding.
To learn more, contact Barry Koslow, JD, at bkoslow@mkaplanners.com, 781-939-6050 (o) or 781-724-6695 (m); Ed Perry at eperry@mkaplanners.com, 781-939-6086 (o) or 857-540-9066 (m).
To ensure compliance with requirements imposed by the IRS, we inform you that any federal tax advice contained in this communication, including any attachments, was not intended or written to be used, and cannot be used, for the purpose of avoiding federal tax related interest or penalties. Securities offered through Advisory Group Equity Services, Ltd., member FINRA/SIPC/MSRB. Advisory services offered by Trust Advisory Group, Ltd., a registered investment advisor. 444 Washington Street, Suite 407, Woburn, MA 01801. 781-933-6100.
