The Pros & Cons Of Making Employees Partners

March 19, 2015

Making Employee PartnerMost employees want to climb to the very top of the corporate ladder. Therefore, a great incentive to your staff is the opportunity to become a partner in your organisation. Many firms, from law to accounting, have utilised this approach in their business practices.

Essentially, a partner is to some extent a part owner of the firm, receiving a percentage of the organisation’s revenues every year.

Some businesses offer partnerships without anything in return, while others require partners to invest a certain sum before repeating the rewards of the promotion. There are pros and cons of offering partnerships to employees, which we will explore here.

The Pros of Making Employees Partners

Less Turnover – One of the biggest advantages of offering a partnership track to valuable employees is the enticement it offers to those individuals to stay at your firm. The individuals know that they need to stay employed in the company to become partner, which usually leads to the top and most qualified staff members not leaving your business. Otherwise, these individuals would be more likely to search for other opportunities at different companies.

More Involvement – When you pay your subordinates a salary, they typically work hard. However, when you offer your staff members a partnership, they become even more invested in the success of the company. Since they own a portion of the firm, they are motivated to help it succeed, since the more money the business makes, the more money they put in their pocket.

The Cons of Making Employees Partners

Less Profit – When you pay an agreed sum of money to your staff annually, you know that whatever profits are left over can go to you. However, when you make employees your partners, they share in your profits. In this situation, instead of receiving 100% of the profit, you can give away anywhere from three to 10 perfect two each partner, depending on the pre-arranged agreement.

Less Decision-Making Power – When offering a team member a partnership, you are not only giving him or her a profit share in your firm, but also some decision making power. The more partners you have, the more opinions you will hear in the board room. This is something for owners and managers to consider, because partners may get in the way of carrying out a vision or a plan if they do not agree with it.

There are certainly benefits and disadvantages from turning employees into partners. While it helps with employee retention and motives staff to be more involved, it is also more costly and takes some decision making powers away.

Many thanks

Stewart Bull

Senior Trainer & Consultant

Mark Williams 3

(Image courtesy of dollarphotoclub)