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The war for talent is fierce in the creative sectors<\/a>. And it can be particularly tough for smaller businesses. They must compete for the best people against larger players, with better-known brands and deeper pockets.<\/p>\n To retain the talent they require, creative businesses need to create a culture of performance, reward and recognition. In my experience, this is something many of them struggle to do.<\/p>\n The most common approach to talent retention in the sector is to offer key individuals \u2018part-ownership\u2019 of the business. This tends to be in the form of share options under an approved Enterprise Management Incentive (EMI) Scheme<\/a>.<\/p>\n EMI schemes offer employees the option to acquire shares in the company. Employees can usually sell these in one of two scenarios: either after a defined period of time; or if and when the company is sold (an exit event).<\/p>\n The objective behind EMI schemes is to encourage loyalty among the creative talent the firm wants to retain. The thinking is that scheme members will work hard, perform to their best, and stay with the agency in the hope of a future pay-off.<\/p>\n A big advantage for staff is that they don\u2019t have to buy the shares upfront. The shares are paid for from the sale proceeds, once the employee \u2018cashes in\u2019, if that\u2019s at an exit-event.<\/p>\n What\u2019s more, EMIs are very tax-efficient, as proceeds from the sale of shares are treated as capital gains, rather than income. That can mean the difference between a 10% and 45% tax rate.<\/p>\n The value of the share options is fixed at the point at which they\u2019re granted, and often forms the basis of the purchase price. This value is locked until the point at which the vesting conditions are satisfied, irrespective of any growth in the value of the firm \u2013 and therefore the shares \u2013 in the meantime. The employee\u2019s contribution to the success of the company is rewarded through this \u2018gain\u2019, and is taxed at just 10% on exit.<\/p>\n The downside, however, is that their value is hypothetical. For staff to benefit, the business must grow in value over time; and in some cases, it must be sold while they\u2019re still at the firm.<\/p>\n EMIs undoubtedly have their place in the creative industries, and can be especially attractive to experienced senior managers.<\/p>\n But they won\u2019t work for everyone, and possibly not even for the majority of the people you employ. Shares in a business that may or may not be sold some day won\u2019t always appeal to the ambitious young stars that creative agencies must recruit and retain.<\/p>\n So what else can creative firms do to hold onto vital talent?<\/p>\n Bonus-sharing schemes are another option worth considering. These offer employees a pre-determined percentage of the value of a pre-defined bonus pool, if a common objective is achieved. For example, if a team achieves certain objectives for a client; or if the company meets its overall performance target.<\/p>\n This can help foster a sense of common ownership, without giving employees shares that may or may not benefit them in the future \u2013 and which they might not actually want. And it can be particularly motivating if the scheme is tied to a clear, transparent target for people to work toward; and if performance is evaluated against a measure they can influence.<\/p>\n At the same time, however, each individual\u2019s reward is still tied to the performance of others beyond their control. This can be off-putting for some people; and it may cause resentment among genuine high-performers if the target isn\u2019t reached.<\/p>\n These are just two options available to creative businesses looking for ways to retain their best talent.<\/p>\n There are many more approaches to incentivising key individuals, which can involve more than just financial rewards. There\u2019s a whole range of intangible benefits that can mean just as much to creative talent.<\/p>\n These include working in a motivating working culture; parent-friendly HR policies; access to high-profile client experiences and exciting career opportunities; or simple things like extra holidays or Friday afternoons off.<\/p>\n Then there are the more unusual \u2018perks\u2019 that many creative agencies are good at providing: pool and football tables, onsite bars, cool workspaces, company weekends away and much more.<\/p>\n The key to finding the right combination for your firm is to communicate with your workforce. Ask them what they want from their reward packages. Then create a strategy that reflects their preferences, while making clear what the business values when it comes to performance.<\/p>\n Goodman Jones has extensive experience of assisting creative businesses with their reward strategies, and with the resulting tax implications.<\/p>\n We can help to:<\/p>\n The war for talent is fierce in the creative sectors. And it can be particularly tough for smaller businesses. They must compete for the best people against larger players, with better-known brands and deeper pockets. To retain the talent they require, creative businesses need to create a culture of performance, reward and recognition. In my[…] <\/p>\nThe \u2018ownership\u2019 incentive<\/h2>\n
Bonus sharing<\/h2>\n
Ask the audience<\/h2>\n
How we help<\/h2>\n
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