Do incentives work?
May 19, 2009
Scott Ryan, my business partner, runs our eight year old IT services business called Architel Holdings LLC. Over the next year his team plans to double the size of the company. Aggressive, if you ask me, but a worthy goal. Interestingly, Scott decided the best way to reach his out-sized goal was to create an out-sized incentive for his team - basically giving the employees half of the company if they succeed.
His plan sounded a little crazy given the current economic environment, but in a world where prices are declining and margins are tightening you need a way to incentivize employees. Turning them into owners can be a quick way to create a vested interest in the success of a company. In a market with very little M&A or IPO action the ownership stakes need to be significant. If you ask me, half is significant. Will it work? Only time will tell.
