Case Study #3

How do I retain key employees who are critical to my business?

Situation

I’m Tim, age 60, and I have built a successful environmental engineering company with more than 50 employees. My only partner is semi-retired, so I now “wear many hats.” My time and energy are stretched thin, at a phase in life when I would like to wind down. Fortunately, I have two key employees with whom I share the load – Chief Financial Officer Melinda, age 39, and Chief Engineer Doug, age 43

Problem

My BSG professional helped me identify various financial risks that I face, but had not addressed. Among these was the realization that I could lose Melinda and Doug, my company’s most valuable human assets, to a catastrophe or to a competitor.

My BSG professional asked me two key questions:

  1. If I lost either key employee, what financial impact would it have on the company and on me?
  2. What provisions have I made for tying Melinda and Doug to the company long-term?

BSG Strategy

Tim’s BSG professional facilitated him and his other trusted advisors to take the following decisive actions: 1) Tim’s company acquired key person life and disability income insurance on Melinda and Doug to mitigate the financial impact – lost revenues and the cost of recruiting and training their replacement – should Tim lose either of these key employees, permanently or temporarily; 2) the BSG professional arranged for a “productivity and motivations analysis” on Melinda and Doug, so Tim could better incent them to act as “owners” of the business; and 3) Tim adopted executive benefits packages that would act as “golden handcuffs” to tie Melinda and Doug to the firm long-term. This was an executive bonus plan for Melinda, which over time, would help her fund her number one priority: her children’s education. For Doug, who is taking care of his kids’ education by foregoing his own retirement savings, it’s a non-qualified deferred compensation plan, to potentially enhance his retirement income. For both employees, there are now more compelling reasons to stay with the firm for the long-term.

© 2012 AXA Advisors, LLC. All rights reserved.
GE-2461594 (3/19) (Exp 3/21)

Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.

← Back to Case Studies

Check the background of this financial professional on FINRA's BrokerCheck
Check the background of this financial professional on FINRA's BrokerCheck