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MFC - Live!

Episode 6: Don Curristan

Are you as a company owner experiencing a high turnover rate? Do you feel that you compensate your employees enough, but it still seems that they would rather go elsewhere given the opportunity? 

In this episode of MFC Live! we will be sitting down with Don Curristan answering the burning question of “Why am I unable to keep my most valuable employees?”

Also available on Podcast:

Video Transcript

Transcript Edited For Clarity

Don Curristan: This is Don.

Enpo Tu: Good afternoon Don, this is Enpo here, how are you doing today?

Don Curristan: I’m doing fine thank you.

Enpo Tu: All right, excellent! So, thank you very much for taking my call Don. We’ve been reaching out to a few of our subject matter experts and one of the things that we’re doing is compiling a list of questions that some of our wealthier listeners have and they’ve always wanted some informative help on. The topic that I have for you is:

“How do I keep my most valuable employees working hard?”

So what I’d like you to do first is to please give our listeners a little bit of background on yourself first.

Don Curristan: Sure, I have been in the executive benefits business for over twenty five years. I have worked with a variety of different types of companies. From for profit, publicly traded, etc… I would say probably my biggest sector of experience has been in the nonprofit area. A lot of work with organizations such as credit unions trade associations, universities, all sorts of nonprofit organizations to help them attract, retain and reward key people.

Enpo: All right excellent, so let me set the stage for you. Imagine one of the people that you’ve been working with now for ten or twenty years reaches out to you now. They’re just frustrated and they say: Hey I just lost another director of marketing to that startup that’s eating my dinner. I gave them all a five percent bonus last year and a two percent raise. But it never seems enough. Why can’t I seem to keep my star employees? So what this client is actually asking is: How do I keep my most valuable employees working hard? How would you answer that question or or maybe approach this area?

Don: Well I think the approach may be a better way of thinking about it in the sense that every company has unique qualities and so certainly there could be some situations that are happening at this organization that might make it more prone to folks leaving. It could be culture… etc. But with that said, I think there are certainly commonalities as well that a lot of companies have and I think what I would want to do is find out what kind of a structure do they have when it comes to their compensation, when it comes to their benefits, what is their communication strategy, and kind of looking at those. How are they positioning themselves when it comes to their senior people and how they keep people in their organization so I think that would be a good first step in the process.

Enpo: Okay so. So let’s dig into that a little bit more. This person obviously is having trouble retaining star employees. What what are some of the things that this person could have maybe taken a look at to help retain those employees. Whether that’s financially, and the owner looks like they gave them all a raise. But, the money didn’t seem to be really a motivating factor here.

Don: Well see, money is not often the primary focus. It’s certainly a big focus but people want other things. They want praise, they want recognition, and then when it comes to the financial side, they want the ability to share in some way shape or form in the up side and the growth of the organization. Now in many organizations it’s just not possible that people could be an actual owner. So there are vehicles that can help people accommodate or adjust for this. Something such as a long term incentive plans, or phantom stock arrangements, or deferred compensation arrangements are just a few of those items. Also the organization, and this is all part of an exploration process that you want to do within an engagement, can also set up retention oriented types of plan designs. So something that will really reward folks to stick around for the long run. Or, if someone saying, we’re not growing the way we want to grow you can use performance based instruments. Those would just be a couple of ideas that are out there.

Enpo: Okay so for the benefit of our listeners could you maybe just highlight one or two that you’ve seen work really well in the past.

Don: Sure, I think a phantom stock programs or long term incentive programs can work well as an alternative to ownership. I think often times, especially in a small company, and I’ve experienced this personally in a company I worked at. Where, although I was a minority owner we and others who weren’t owners were on long term incentive plans so you can give people to feel that they’re going to be involved in and be a partner in what’s happening with the company and the growth that it has experienced. So, I think that’s certainly one way of doing it. Another way which is more retention focused can be to, as I mentioned, create programs where there is a significant reward over the time frame that someone is looking forward to working or the organization would want them to work there. So let’s say it’s seven or eight or nine years you’ve got a significant carrot out there that that person is working towards.

Enpo: Gotcha, so could you share without sharing too many details that are private and confidential, an example of a time where you were able to maybe put one of these programs in place and the effect that it had on retention?

Don: Sure, we had a situation, this is three or four years ago where an entrepreneur young lady had started a company. She had done pretty well. She had gotten the company up to two or three million dollars but she was very much of a creative. Which I think is left brain if I’m not mistaken. She felt like she wasn’t gonna be able to really get this to the next step. So a serial entrepreneur approached her and offered to purchase her company which she accepted. But he then had a challenge, and that was he needed to retain this young lady plus two other key employees in order to make the company really run effectively and to grow. Because, he was not a day to day type of person particularly within this industry.So we engaged, or I should say it, the owner engaged us, we went through a process of plan design and we ended up putting in a phantom stock arrangement. And, not only has the retention stayed true to what the goal was, which was at least ten years for each of these individuals so far, but the growth of the company’s been spectacular. The company is now, the last I checked, I think approaching twenty million dollars in revenue in just a matter of four years starting from about three or four million. So it’s really been quite a success story and I think the message in the communication of the program has played a role in that process.

Enpo: Okay that’s that’s actually very interesting that you mentioned education you maybe tell us a little bit more about why some of these plans may need that additional layer of education?

Don: Well I think there’s a couple reasons first of all I would say about any program you have, benefit program or for that matter compensation program, it’s a good idea to make sure that people understand that we live in a great world these days. But, we also have a lot of choices and there could be a lot of complexity. So people I don’t think automatically understand even common benefits such as health insurance for example.
Or, 401(k)s and they even less understand things are not quite as common such as deferred compensation arrangements, phantom stock programs, long term incentive programs, etc. So, I think that’s a really key reason why you would want to do this and it also helps people understand the value. You were mentioning earlier that you know a company it in the story you were saying where’s he was giving raises. But the people were leaving anyway, and without doing anything specific about that situation, one of the questions I would pose would be how did you communicate those raises and how do people earn those raises? You know what were the circumstances around the raises? So communication is a very important element here in terms of any plan you put in, but again, especially programs that are not as common in the marketplace.

Enpo: I see, okay so actually that’s a good point so often times whenever an employer is communicating with their top employees. They may stake holders or they may not be, but let’s say that in this specific case, they aren’t stakeholders, the way to make someone feel that there is a long term financial incentive with the company could be one strategy. But, you’re saying here that a lot of it is communication. So have you found that often when you’re working with an employer they really don’t know what their top employees want? Or, would you say that they know and it’s just that they’re not quite sure how to find the right solutions for them? Or, what do you see it that’s common in the marketplace?

Don: Well, I would say probably more of the people who don’t know exactly what the employees want. Although there are other situations similar to the other alternative you mentioned. But, one of the tools that we often use at the beginning of a process for just this purpose. This is after we’ve got some questions, to say, okay, what kind of things are you hearing from the employees or the key employees? When people don’t know is we suggest that they might use a survey to find out exactly what people are thinking about. That’s a very effective tool to use particularly early in the process when we start to think about how to solve certain problems. So, I think it helps define what is the challenge or problem that they may have and also if for no other reason you can help bolster a communication strategy going forward.

Enpo: Okay that sounds like a lot of work. Do you feel that maybe sometimes employers are just giving up and saying: Hey this is just a waste of my time. What would you say to that employer if they’re not sold on the “hey let’s go and do some research.”

Don: Well I think a couple of things, first of all it doesn’t have to be a lot of work. I suppose it would be if you’re trying to do it on your own with the ten fifteen or twenty other things that most employers/owners have to deal with. But if you use firms such as ours who has a lot of experience in this area, that can certainly lighten up the load. The other comment that I would make there is: think about the cost of turnover in the organization and to go back to your example at the outset of this discussion with the significant turnover that this person was having the cost would be immense. I think in most of the organizations we work with, your personnel are really one of the key components, if not the key component in the company. So I think it’s worth the investment to have your key people, one of the key components that are driving growth in your company, to address those needs.

Enpo: I want to thank you so much for your time you’ve given up a lot to think about and ponder.

Don: Thank you I enjoyed the opportunity to speak with you.

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