Follow Dallas Linkedin
Email Dallas Email
Business Growth
Oct 20, 2021

Protecting Yourself Against Employee Risk

Sponsored Content provided by Dallas Romanowski - Managing Partner, Cornerstone Business Advisors

Successful business owners constantly strive for growth. And when everything’s humming along, it can be easy to think the good times will last forever. However, it’s crucial to protect yourself, your company, and your future against employee risk throughout your growth and planning.

While it’s likely that many of your employees are good people working in good faith, just one error or bad-faith employee can ruin years of planning. Today, we’ll walk through a few ways to mitigate employee risk and the consequences of succeeding and failing in doing so.

Protecting Against Bad-Faith Employees
Key employees are those who consistently exceed expectations and tangibly affect company performance. You likely know how important it is to keep key employees on your team for the sake of your long-term success. But it’s just as important to prevent key employees from wielding their power against you.

For example, a key employee might understand how important they are to the company and take advantage of it. One key employee working in bad faith can purposely sabotage your plans to get ahead for themselves.

In the worst cases, they may attempt to blackmail you if they know you need them to achieve your goals. For instance, if they find out you intend to sell your business on the condition that they stay, they may demand a slice of the sale price as a condition for staying, putting you in an impossible bind.

Protecting against these possibilities is paramount to your long-term success. You might consider implementing non-compete and non-solicitation agreements for your employees to prevent such issues from the outset, to the extent they are available for your company and the employee in question. That way, if an employee leaves on poor terms, you position yourself to take legal action against bad-faith actors.

You may also consider implementing more checks and balances in the critical functions inside your business. Having two different employees involved in essential tasks such as collecting accounts receivable, vendor contracts, or preparing financial statements can reduce an employee’s temptation to engage in self-dealing or theft.

Retaining Great Employees
Even in less extreme circumstances, a key employee who threatens to leave can do irreparable harm to your planning. For instance, a key employee may tell you they received an offer from a company outside your industry. While that key employee may not intend to harm your business, simply leaving your company could harm it. They may also unwittingly position clients they brought on to leave.
In such cases—where a key employee might find a place to work that’s a better fit for them—you might consider retaining them with a strong incentive plan.

With the right kind of incentive plan, you might reduce the likelihood of key employees leaving for greener pastures. However, the “right” incentive plan depends on what your key employees want. While some may have interest in ownership, others just want more money. Likewise, you must make sure that what the key employee wants can ultimately contribute to your success.

In short, key employees are both a benefit and a risk. A strong incentive plan is one of the most direct and effective ways to increase the benefits they provide while decreasing the risk they’ll try to leave for something better.

Repositioning Ineffective Employees
Even the best-intentioned employees can slow or stop your planning. For instance, you may have employees who always bring a can-do attitude but simply don’t have the skills to help you achieve your goals.

It’s important for you to find ways to have the best people making the biggest decisions for your company. That means avoiding the temptation to install people with the right attitude in positions that aren’t the right fit.

For example, you may have a sales manager who’s really nice and likeable, but who merely hits quotas every month when you need someone who can outperform those quotas. Relying on that person to drive sales performance may not be appropriate for your longer-term business goals, no matter how nice that person is.

Instead, you’d likely want to consider finding the right person—whether internal or external—to drive the results you need to achieve your goals. You can still find a more appropriate role for the nice, average performer. But simply installing people in positions that can affect your success because they’re likeable can be an act of planning self-sabotage.

Planning Impacts Employee Risk
Planning can help you leverage your team’s best qualities, and reduce the risk associated with some of the more negative aspects of human nature. Looking for ways that you can do both, through planning, can give you peace of mind and an advantage in a competitive world.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

Welcome to Cornerstone's Exit Planning newsletter. We'll provide you with practical tips on planning your business exit twice a month. Contact us with any questions or to help get you started with the planning process. Enjoy!
Chip Mayo and Dallas Romanowski
 
© Copyright 2021 Business Enterprise Institute, Inc. All Rights Reserved
As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.


The Cornerstone team includes former C-Level executives, successful entrepreneurs and advisers who offer unmatched experience in delivering advanced, custom-tailored, results-oriented solutions for business leaders. As a member of the Business Enterprise Institute (BEI), Cornerstone is an authorized distributor of BEI’s content and Exit Planning Tools. We developed the Performance Culture System™ to help clients implement best practices and drive high performance throughout their organization. For more information, visit www.launchgrowexit.com, call (910) 681-1420 or email [email protected]
 
 
 

Other Posts from Dallas Romanowski

Bizjournalblockad
Ico insights

INSIGHTS

SPONSORS' CONTENT
Jimheadshot

The Wilmington Construction Market: Trends, Recognition, and Challenges

Jim Hundley - Thomas Construction Group
Cfss headshots parker robert webversion 21422121214

The Latest Solar Scams and What You Can Do to Help Stop Them

Robert Parker - Cape Fear Solar Systems
Headshots march websized 2

Is Your Commercial Roof Ready for April Showers?

David Grandey - Highland Roofing Company

Trending News

Conservation Group Signs $8M Deal To Buy The Point On Topsail Island

Audrey Elsberry - Mar 26, 2024

National Organization Bestows Top Award On Cape Fear Professional Women In Building

Staff Reports - Mar 26, 2024

Engineering Firm Hires Four Employees

Staff Reports - Mar 26, 2024

N.C. Ports Officials React To Baltimore Bridge Collapse

Audrey Elsberry - Mar 26, 2024

NCino's Fourth-quarter Earnings Signal Rebound From Liquidity Crisis

Audrey Elsberry - Mar 27, 2024

In The Current Issue

Q&A: Andrews Reflects On Leadership

Pender County Manager David Andrews is slated to retire this summer after 33 years in local government....


MADE: Polyhose Inc.

Polyhose manufactures and fabricates hose protection, paint hose assemblies and rubber hydraulic assemblies from its Pender County facility....


INFO JUNKIE: Jack Fleming

Jack Fleming, owner of Socialry Marketing & Scourz and emcee for 1 Million Cups Wilmington, shares his media and tech picks....

Book On Business

The 2024 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2023 Power Breakfast: Major Developments