Three Strategies to Combat “Quiet Quitting”
Three Strategies to Combat “Quiet Quitting”
While the Australian economy is in the midst of a tightened labour market, inflation and a skills shortage, the emergence of ‘quiet quitting’ as a trend is not surprising.
There are various opinions on whether this is in fact a trend employers need to seriously consider or simply an observation of disengagement gone viral – what is clear in our experience is that companies that are genuinely interested in building an engaging culture are often those that achieve value at exit.
It is also extremely important to maintain the performance of a business and retain employees while a business sale campaign is underway. Whether quiet quitting is a problem for you or not – as an employer, you may wish to look at some key strategies you can use to focus on retention and performance.
Employee Share Schemes
Providing a way for key staff to hold equity in the business can be an extremely successful retention strategy. It provides skin in the game (critical during a growth phase), it lets employees truly engage with the business, and encourages loyalty. When considering a share scheme, there are a huge range of questions to consider – some of the most important being whether shares will be paid for (ie sold or given), clearly defining who retains control, shareholder rights and what happens in an exit scenario (a shareholders agreement is critical).
Performance Base Bonus
Phantom Equity
A less known but increasingly popular strategy is to use “phantom equity”, where a bonus program effectively shadows the performance of the company. Effectively the employee/s involved receive a benefit based on increasing the value of the business and the owners retain equity and control. Caution – if using this strategy, you must choose your payment triggers and timing wisely. If the sale of the business is the trigger for payment of a bonus, you may have difficulties finding a buyer that wants to take on this commitment.
Why not?
Many practical issues come with financial retention strategies like those listed above – the timing of payments, payroll, and tax implications and “key person risk” (which arises when your business relies too heavily on one or a small handful of individuals) are all considerations you should make when embarking on any of these.
Any retention strategy should be considered in the context of “protecting” the value of the business – that means also considering company policies and/or codes of conduct, how you deal with employee-related concerns and issues, and documenting systems and processes so your business captures key knowledge and can transfer it to other team members if need.
An Observation
Working with a huge range of businesses and their owners has shown us that team engagement is not only important for business performance now, but also at exit. That said, there has never been a client where we have seen strategies that focus on employee engagement employed purely to drive business value. Rather, owners that use these strategies successfully are genuinely interested in building employee engagement into their culture – better multiples and a successful deal, are beautiful side effects of this.
“It is far more powerful and effective to have staff who are staying by choice.” – Joanna Oakey
We give you back your confidence as an employer by putting the policies and procedures in place to ensure your employees are looked after and your future is protected.
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About the author
Joanna Oakey
Lawyer and Managing Partner, Aspect Legal
Joanna Oakey is a commercial lawyer and deal maker with a passion for business, who has worked with hundreds of businesses during her 2 decades in the ...
