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.”