The talent and contributions of key employees are often cited as one of the most significant value drivers within a successful company. Properly motivated key employees help build profits, which in turn builds enterprise value. They also hold the key to successful ownership transition.

Contractors that plan to transition ownership to an internal buyer need to entice non-family talent to stay the course. And for those owners who plan to sell to an outside party, it’s critical to have a capable, motivated, and loyal group of key employees in order to maximize the sale price.

Developing, recruiting, motivating, and retaining key talent is indeed critical to building company value and an owner’s legacy.

This article will discuss how to identify your company’s key employees and how to design an effective incentive/retention plan that is a win-win for all parties.

Who Are Your Key Employees?

The first step in understanding the how and why of key employee incentive/retention plans is to identify your company’s key employees and understand what is important to them.

While most employees are motivated for typical reasons (e.g., a pleasant work environment, competitive pay/benefits, opportunities for advancement, job security), key employees are different; they think and act more like an owner. They are attuned to company profits, industry trends, competitive advantages, customer/vendor relationships, productivity, etc.