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  • Writer's pictureChris Reel

The Best Way to Compensate Your Best Employees

Everyone knows that bringing on and keeping top employees in your business is a key component to growth and success. But as you're growing, how do you make sure your top employees don't leave for some other job that might be paying more than what you can afford?

One way is to provide a standard profit share to the employee's compensation plan.

This is pretty standard, and basically spells out that the employee will take a piece of the pie of profits at the end of the year, or quarter, or however you want to structure it. The problem with this approach, besides the fact that it's too vanilla, is that it lacks one key component that promotes the growth of the company.


Incentivizing your key employees to grow with the company will keep them motivated and reward them for their hard work.

My favorite way to do this is through what's called gain sharing.

Gain sharing is a way to compensate key employees by providing them with a piece of the profit that they ultimately have a direct impact on, or that is directly related to their activities in the business. This could be profit associated with them reducing overhead, increasing productivity or increasing revenues. There's a few different KPIs that can be implemented with a gain sharing model that aren't available for the traditional profit sharing model.

The verbiage and legal construct of a gain sharing program is crucial, because without proper implementation there could be a host of tax or other legal problems that can arise. Explore gain sharing if you're looking to add in a key employee to your team to keep them hooked, and also maintain their motivation. You might be pleasantly surprised with the outcome.

We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to implement compensation structures for key employees, proactively deal with the issues that arise as your business grows and everything in between. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.

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