I’ve been in business 20+ years - starting alone for the first years. Built it up and now have 5 employees. Recently I have been talking to my employees about buying into the company as I am nearing retirement. I gave two of my employees raises one of them a percentage based on his production. after that I got total silence never a thank you or anything so that caused some concern right there. One of the employees was receiving over $1000 a month raise. Recently I got Covid-19’s bad and was out for 2 months. I I have cameras at work so me and my partner were reviewing the cameras and noticed they were talking a lot of shit about me and making plans to start their own business I’m presuming stealing all the high-end clients. The Reality is that is if you put employee in the responsibility of dealing with clients you have to deal with the prospect that he might steal them eventually. less people and less drama and possibly hiring subcontractors to handle the business that I pay these people a lot of the time to stand around and do nothing might be better. We have a established a business location and will probably be fine. previously I’ve been talking with my right hand man about my exit strategy but now I want to talk to him about his exit strategy, one of the employees is poison to the others I can hear him talking shit about me and the business. I’m sure a lot of you experience the same type of situation’s any advice on how you handled it and the outcomes thereof would be appreciated thanks guys
This is a lack of retirement planning. If you don’t pay people what they are worth, they will go elsewhere.
Rather than give raises only, start profit sharing immediately so they can see that their compensation is tied to profits.
No one or two employees will idly talk about leaving if they are getting paid their worth. If they still think they can do better, invite them to leave. If you haven’t already, make them sign a nondisclosure and noncompete.
Once the talk has died down, start with your best internal leader and hammer out a long-term buyout agreement. Then, offer the same thing to each employee to buy an equal share. What you don’t sell now, finance for them. You probably want to take payments over time anyway, so stagger the payments over five years, after which time they can vote their vested shares.
There will be no reason to sabotage you or the deal if stock shares immediately transfer back to you, and the other owners will turn on them.
In effect, you are creating an employee owned cooperative to supercede you.
You made money by paying them less than what they are worth. Rather than have them compete, you need to get them to buy you out.
You also might not get as much as you want because they are going to give themselves raises, and there will be less profit to pay you with.
Just don’t be surprised if they don’t value it like you do, but a smaller percentage is better than 100% of nothing.