Leadership can be valuable. I explored just how valuable leadership can be in a recent article.
But keeping the right leaders can be tricky. Good leaders, in most cases, have options to go elsewhere.
And since the very survival of our enterprises could be tied to keeping the right people we have no choice but to get it right.
So let’s look at some ideas I’ve learned that helps keep the right talent in the right place. These are lessons from working with countless companies on their corporate transactions to build the future of their businesses.
If you are a business owner or leader I am sure there will be at least a few things you can build on here.
Key 1: An Appropriate Non-Compete
It’s not really the best idea to lead with punishment but I list the non-compete first because it usually comes early in the hiring or employment process and is critical for your business safety.
A good non-compete really shouldn’t be viewed as a retention tool but it can help with negotiations to keep someone should it become necessary.
You’ll want to work closely with your corporate counsel on getting a good non-compete structured. Generally, in many states, you’ll be able to find a way to have an enforceable non-compete.
In Florida and Texas, where I do much of my work, we can generally have non-competes. But they have to be worded in the right way. Even states that are thought of as not friendly to non-competes often allow them in some cases especially if ownership of a business is involved.
The goals will usually be to protect your business and to make sure you get, at least, a right of first refusal should your leader(s) want to go elsewhere. So, within the limits of the non-compete, think about “what if” your person walked away. How do you protect the business?
A secondary goal of the non-compete might be to bring your leader back to the negotiations table with them so you can get them what they need (more on that in the upcoming keys).
Key 2: Capitalizing On The Leader’s Style
Moving to the more positive side of the ledger a great way to keep leaders is to make them want to stay. And if you can build an organization that has it’s culture but that allows a leader to bring their individual style into the workplace you are getting to a powerful place.
I counsel all of my clients to find their way to Do Business Differently™ which means to find their unique way in business. You will find that true leaders will have their ways too.
All of us have uniquenesses and things we do better and are more comfortable with. And so will your leaders.
A key to keeping good leaders is to let them lead – their way. That means you need to have a strong culture in your business and controls and protections so that no one person can harm the business. But within that you want to allow the freedom for leaders to lead.
The balance is as tricky as it sounds. But it’s a key to success. A true leader isn’t going to want to just do what others tell them. They are going to want to grow, innovate and improve.
And that growth, innovation and improvement are critical to your bottom line.
Key 3: Long-Term Incentives
Another great way to create alignment with great leaders is long-term incentives. This typically means ownership, quasi-ownership or other performance pay.
Incentives can take a lot of forms and it typically takes some planning for a private business. For instance a business that is 100% family owned will usually not want to give equity to a non-family member. Just giving a small percentage away can have a radical effect on the business under business law. But payments based on the increase of the value of the business might be very doable.
What you are going for here is getting your leaders interested in one key metric: the value of your business. This generally makes them think more like an owner – which is key if you, the owner, want to step away from the business.
When setting up the incentive plan you want to make sure the leader’s upside is closely related to the things they control. So you wouldn’t want to incentivize a department manager on the performance of an entire enterprises in most cases because there is not a direct relationship between a single department’s performance and the enterprise’s value.
Sometimes you’ll want to adjust your legal structure to create for good incentive plans. I’ve had clients who have used subsidiaries as a way to create avenues to equity ownership in portions of their business without having to give up control or, on other end, having to incentivize leaders on an entire business when a leader was only running a portion.
The key is to think about how to make the leader financially tied to the financial health of the organization (and at the same time not invite fraud – that’s a different article).
Key 4: Open Communication
Good leaders are going to want to do things in the business. They are also going to have personal lives, goals, dreams and needs.
So one of the keys to retaining good leaders is open communication. Do you each know what the other has planned for the future? Do you know what demands are impacting decision making?
Most private businesses I work with don’t feel like they can give their leaders massive incentive packages like some of the big companies can. But they can usually give their leaders something very few others can: the ability to customize.
Good communication can mean you can make a home for a leader. A home that that leader doesn’t want to leave even if other dangle money in front of them and try to lure them away.
So work to a culture of openness and frank discussion that allows you to build the job the leader needs so they’ve never want to leave.
Key 5: Challenge, Change and Growth
Most leaders are interested in challenge, change and growth. It is almost 100% tied to being a leader.
Most leaders had a chance, at some point in their career, to take an easy way out and be someone that answers to others. And almost all leaders rejected that because they wanted more.
Make sure you are giving your leaders what leaders need.
Do they have the power to make changes?
Do they have responsibility and challenge?
Can they growth?
Are you supporting their growth?
You’d be surprised how many organizations want great leadership but don’t give their leaders the foundation that they need.
Bonus: Wiring Your Company For Success
Most of this article is about the surface things you can do to make your company more attractive as a long-term home for leaders. All of this speaks to changing the internal DNA of your company so it’s built for leaders.
So use what we discuss here today as a jumping off point.
Start with these basics but start working with your leaders – and your advisors – to build the culture you want in your future. Start with the end in mind. Build the culture you want in the future then let the leaders emerge or hire them in.
What a company in Dallas, Texas and DeLand, Florida (the two cities where I currently keep offices) will do will be different based on local culture. So will the plans of two different companies in different industries.
The ideas in this article are universal. How your customize them and add them to the culture of your company will determine your success.
NOTE: This article is a piece develop a small portion of the content of the book tentatively called The Journey: Finding Your Place From Entrepreneur to CEO being co-authored by The Our Shawn McBride and Ann Gatty. If you want updates on the book including the possibility of joining our release team or getting one of the first copies please join our mailing list here.
DISCLAIMER: This article talks about legal issues. I am a lawyer licensed in multiple US jurisdictions, but I am not your lawyer unless we have signed an engagement agreement. Please view this material as educational and consult counsel you have retained for advice on your specific facts and circumstances. Do not rely on these general statements as legal advice.
By: The Our Shawn McBride, is the business nerd and long-time business attorney that focuses on changes of ownership in businesses. He works with business owners that know their business is about more than themselves to get ready for their future within the future of business through keynotes, training and personalized solutions. In furtherance of this he hosts The Future Done Right(TM) Show where he collects, digests and gives lessons and insights on The Future of Business. If you want regular content on the future of business subscribe to get new blog posts from us here.
You’ll quickly notice his unusual suits which he uses open the conversation of how businesses should Do Business Differently™.
The Our Shawn is based in DeLand, Florida (between Orlando, Florida and Daytona Beach, Florida) and Dallas, Texas where he keeps offices. You can also find Shawn on webinars or traveling nationally or internationally for speaking engagements.
Check me out at: www.planningdoneright.com
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