Business gurus often talk about the view from 30,000 feet – the big picture that provides
a look at overall operations. Perhaps, however, the focus should be on the view from 30
feet – a close-up of specific processes and procedures that make an impact now.
Every business has three to five employees who are critical to its successful operation.
Metro Plastics Technologies, Noblesville, IN, has incentivized its key people, providing
the employees another reason to remain with the company for the long term, while also
communicating the employees’ value in a tangible way.
“We have the traditional 401k plan,” explained Lindsey Hahn, president and owner of Metro
Plastics Technologies, “and we have a profit sharing plan that is based on a percentage
of our pre-tax profits and distributed proportionally to all employees based on earnings.
Those pieces are important; they attract good people.” But Hahn also felt that employees
who made long-term commitments to the business and were keepers of key pieces of
knowledge deserved an additional incentive to remain. Metro Plastics had previously
utilized a weighted system for its profit sharing plan, based on years of service, but
that method was disallowed by the federal government. Hahn had to find a new incentive
plan.
“The most important thing in your working environment is culture,” Hahn said. “And there
are typically three to four people in every operation who are critical to the culture and
to the everyday success of what the business is trying to achieve. It would be difficult
to replace them, and the transition period could have a permanent effect on the
business.”
Metro Plastics added an additional employment incentive for key members of its management
staff by providing a whole life insurance policy, funded by Metro Plastics and owned by
the company until a specified future time period.
Metro Plastics remains the owner of the policy, but the key employee gains with each year
of service, with a tax free benefit that accumulates additional cash value each year.
After the employee has been in service with Metro Plastics for a specified time period,
the policy ownership is given to the employee.
“In a small company, there are certain employees that we can’t afford to lose,” Hahn
said. In Metro Plastics’ case, there are three employees who are vested in the policy and
have ownership of their own policies. Metro Plastics continues to pay the premiums, but
the employees are free to do as they wish with the cash value. Two more recent employees
also are deemed key to the operation, but Metro controls the policy ownership.
Hahn understands that a whole life policy for his key people is just one piece of the
puzzle. “You can’t intimidate people to stay, and you don’t want to them to stay just for
the money,” he said. “But this gives employees a personal value for their time served.
It’s a clear indicator that you value what they are contributing to your business.” |