Attracting and Keeping Good Employees in Colorado
There has been much in the news recently about Colorado’s low unemployment rate. This is good for workers, but hard on business owners. As this Denver Post article points out, businesses large and small have had to become creative and aggressive in their hiring practices.
The article mentions that large businesses like King Soopers and Walmart are boosting their employee benefits, including their 401(k) match and education benefits. How can a small business owner compete with these large companies?
One way is to offer incentives based on the success of the company. There is the standard cash bonus, of course, but that can be hard on the company’s cash flow and is not tax advantageous for the employee.
More of our small business clients have started discussing employee ownership. They may come into our office to discuss bringing in a key employee as a minority owner, or they may want to set up an Employee Stock Ownership Plan (ESOP). Both of those can be the right answer in the right situations.
However, whenever you bring in new owners you give up some control and privacy. Even in this tight labor market that may not be the right answer to keep good employees.
A middle ground approach can include giving employees some skin in the game without giving them ownership. This could be a profit sharing plan, deferred compensation, or “phantom equity.” All of these are written enforceable parts of your compensation arrangements with employees that allow them to benefit when the company is successful but do not give them all of the rights of ownership.
If you want to learn more about any of these options, give our law office a call and set up an appointment to meet with our business planning attorney.