Best way to retain employees?

searcher profile

April 15, 2020

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management in Los Angeles, CA, USA

I am thinking about offering an LOI. The company has a total of 20 employees. For a typical team of this size:

1. What kind of questions should I be asking pre- and during DD to assess employee turnover risk?

2. how should the new operator think about minimizing employee turnover? Certainly improving benefits with some sort of golden handcuffs would be one way, seeking feedback on employee satisfaction etc.

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commentor profile
Reply by a searcher
from University of Pennsylvania in Chicago, IL, USA
A simple question to ask that will enable you wrap your head around some of the risks is ask for an org. chart, with titles/functions, tenure with the company, and compensation levels (cash + benefits). Pay particular attention to folks with above market comp, and folks with below market comp. There are risks in both situations. Typically with employees, there is a fair amount of inertia, especially if they have been with the company a long time - so the default is that they are going to stay put - ** BUT ** think of it from a stakeholder management perspective - put yourself in the shoes of each person in the org chart... under your ownership - does the "deal" get better or worse for each person? If you do not intend to cut pay and you aren't relocating operations or materially changing "life" as they know it, people are going to work with you. I would avoid doing anything that seems transactional. Build a relationship of trust and mutual respect with everyone and you'll do fine.
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Reply by an investor
from Illinois Institute of Technology in Pasadena, CA, USA
Non-financial: possibly retain the owner/president for a transition period....employees probably trust this individual, they do not know you. Full transparency and communication is absolutely critical. Tell the worker on day one: They are the true assets of the company and your job as new owner is to provide them all with growth opportunities to continue the excellent work they have been doing. This work force may be hourly and equity is not very important, nor understood when you're living hand -to-mouth. btw: What has been the TO in the past? This and other HR issues should be thoroughly vented pre-LOI in your DD.
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