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Category Archives: HR Management

How Employees Really Act When the Owner Isn’t There

By | Business By The Book, Compensation Management, HR Management, Human Resources, Leadership | No Comments
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As a follow up to my The Key to Motivating Employees post, I wanted to share an incident I experienced a couple of years ago that highlights the necessity of creating the proper incentives and culture to encourage employees to think more like owners. My family and I pulled up to a specialty cabinet store about twenty minutes before closing – sufficient time to run in and make a large purchase of around $1,000 for our farmhouse renovation project. Unbeknownst to the employees, we already had been all over their website and we knew exactly what we wanted. As I…

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Compensation Plan for a Startup Sales Executive

By | Business By The Book, Compensation Management, HR Management, Human Resources, Sales, Sales & Marketing | No Comments
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Q: I am the founder and CEO of an early-stage high-tech startup and I am in the beginning stages of trying to raise $2.5 million in an initial round of venture capital to ramp up operations. I am trying to attract a high-level sales/business development executive to sell for the company on a part-time basis. He has asked for $100 per hour for his base pay, plus 10% commission on anything he sales, plus 5% ownership of the company with an anti-dilution guarantee that his ownership will never fall below 5% no matter what happens to the company in terms of…

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He Was About To Fail, But Didn’t Realize It

By | Business By The Book, Cash Flow Management, Compensation Management, HR Management, Leadership, Leadership and Employees, Ownership & Purpose | No Comments

“The fence guys are here!” I exclaimed to my wife incredulously one March morning. They had shown up two days in a row and the surprise was clearly in my voice. The “fence guys” had been a frequent topic of conversation on our hobby farm over the previous several months. The “fence guys” were the fencing contractors that were building the white plank fence around our horse pasture and our farmstead. Believe it or not, this had all started nine months earlier when I selected this contractor over two others after receiving their proposals. The owner of the company was…

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The Key to Motivating Employees

By | Business By The Book, Compensation Management, HR Management, Human Resources, Leadership, Leadership and Employees | No Comments

Q: What issues should I anticipate when I hire my first employees in terms of how to motivate them? A: You introduce the “agency” problem into your workplace. Employees as paid agents will not care as much about your business as you will. Employees get paid no matter how much (or little) work is accomplished. Without creative compensation programs, their pay is not connected to how much they produce or how much value their work generates or how well the business performs. It’s the issue Jesus spoke about in John 10:12-13: “But a hireling, he who is not the shepherd, one…

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How to Give Employees Ownership or Equity Value

By | Benefits Management, Business By The Book, Compensation Management, Finance, HR Management, Human Resources, Leadership, Leadership and Employees | No Comments

Q: When and how should I give equity or other incentives to my senior managers in order to retain them? I’m considering giving them equity, but not sure how to do that. A: While I absolutely understand the need to retain key management staff, I would be careful about giving up ownership to them and the manner in which you do so. In order to create an incentive for managers to stay with an organization and to give them some “upside”, there are basically the following options: Form a corporation and issue stock options – This is the typical way of giving equity…

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