Using stock as an incentive

With the American economy finally breaking the shackles of recession, there are signs that employment is finally turning. With more job prospects emerging, the attention for employers has turned to retaining staff, and finding successful methods to achieve this.

One volatile employment area is sales, which traditionally has a high turn over, and as a result, demand for top sales performers through both times of employment virility and recession is always high. In short, top sales staff are always liable to be poached from rival businesses.

This competition lends itself well to the employee, as it gives them certain scope and power during the employment process to negotiate an improved contract.

Stock as a reward

In fact, one method to keep top performing staff is to offer stock rewards that improve value the longer the employee remains with the company.

A recent Alert on sales force retention "Are Your Sales Stars Ready to Bolt?" by Buck Consultants advocates using stock to recognize and retain star sales performers.

"...if you’re in a position to use stock to reward performance, you should consider making restricted stock grants with continued employment vesting requirements to top performers. These grants will further distinguish your stars from other sales reps and will also efficiently raise the individual’s cost of voluntarily going elsewhere," the alert said.

As well as stock rewards, adding a greater future incentive, like dangling a carrot that takes five years to get hold of, is an excellent way for top staff retention.

"Another way to make it obvious to top performing sales reps that staying with the company is financially worthwhile is to reward consistent long term performance. Three or five year long term incentive plans that provide the opportunity to earn a significant amount of incentive pay for compounded performance can be a powerful retention device. It is not unusual for top performing sales reps to earn an additional 25 percent to 50 percent of their three (or five) year incentive earnings at the end of the plan period for consistent performance achievement," said Colletti-Fiss in the April short How to Use Compensation to Retain Top Sales Talent.

The bottom line is... well the bottom line, and that means to generate the big bucks employers need to retain top buck earners by going the extra mile and offering an improved piece of the corporate pie.

Related articles:

Employee incentives - Employee benefits | Reward and incentive strategy | HR Management Employee Incentive, Recognition and Reward Case | RK Incentives Offers Employee Incentives That Work

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