Ever since the Great Resignation in the wake of the Pandemic (the phenomena in the UK and USA of employees resigning en masse), many small and medium sized businesses have struggled to retain senior employees in an increasingly competitive professional market.
Of course, there are a plethora of reasons as to the difficulties of retaining employees, and there is truly no single most important factor. However, I believe looking at the issue through the lenses of existential philosophy may help business owners retain key employees by giving them a true purpose within the business.
One such example can be found in the works of Viktor Frankl, a psychologist, philosopher and holocaust survivor. Frankl developed a discipline of psychology, logotherapy, which in a very condensed overview, drew on his own experiences, to argue that a person’s central motivational force is a search for life’s meaning and purpose. Those who have a sense of purpose, Frankl argues, have an immense amount of drive and can overcome almost any difficulty.
It is said antidotally, a full-time worker will spend one third of their life at work. It’s easy to see how employees who feel under incentivised or uninvested quickly feel disillusioned with their work life, and start looking elsewhere for meaning and purpose. Perhaps with an offer of jam tomorrow from a competitor or leaving the industry altogether to attempt to find purpose in pastures new.
People often feel disillusioned with day-to-day work because it can resemble the endless, meaningless labour faced by Sisyphus highlighted in Albert Camus’ ‘The Myth of Sisyphus’. In the Greek myth, Sisyphus is condemned to roll a boulder up a hill, only to have it roll back down each time he reaches the top, forcing him to start over indefinitely. Camus reflected on this and drew a parallel to Sisyphus’ repetitive and futile task symbolising, humanities search for meaning in a meaningless world.
We see time and time again, business owners struggling to bring key employees into the fold of the business, thereby motivating them to grow the business and provide their role with genuine self-purpose and interest, without feeling they are giving away too much control of the business or watering down the value of what they have successfully built to date.
Fortunately, there are many share structures and schemes that can benefit employees, making them invested in the business’ success, with little if any impact on an owners’ control of value of the business.
For example, one such scheme involves the issue of ‘growth shares’. Typically, these are non-voting shares which are not entitled to dividends but offer senior employees the opportunity to invest in the company and participate in future growth with a low or no investment requirement.
Growth shares are constructed in such a way that they have no rights to share in the proceeds of a sale of the business until a certain amount has been distributed to the business’ legacy owners. This tends to be the value of the business as at the date they are issued. This means that the senior employee receives a fair share of the business’ growth in value from the date on which the shares were issued. Example:
A Company is estimated to have a market value of £1,000,000 at the time it issues growth shares to an employee. Between the date at which the growth shares were issued and the date on which the business was successfully sold to a third party, the businesses value grew to £1,500,000. As such, the legacy owners would receive the entirety of the first £1,000,000 with the senior employee receiving a share of the growth sum of £500,000.
Of course, a business is a blank canvas of which any number of incentive schemes can be put in place, for example, employee share options or slim shares. Each of these schemes can act to bring personal purpose and benefit into a valued employee’s role, which will incentivise them to not only remain a loyal employee but motivate them to help the business reach its full potential and value. With self-interest in the business, giving their role meaning and purpose, the employee will not only be highly motivated to see the business grow and succeed but will also increase the likelihood that they will remain with the company.
If you are interested in discussing anything in this article or are looking at incentive schemes to motivate and retain employees, please contact our Corporate team on 01603 677077 or email info@spiresolicitors.co.uk.
