You have worked your tail off as an agency owner. Blood, sweat, tears and a lot of late nights sweating payroll in the beginning. And yet — you are way too quick to give it away. Many agency owners think that a gift of stock will keep a key employee. I’m here to tell you why that is rarely the right choice. For you or the employee.

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Hey everybody, Drew McLellan here from Agency Management Institute. This week I am on a terrace at the Hotel Thompson in Downtown Chicago. It’s a fantastic hotel if you’ve never checked it out. So right now in the Facebook group for podcast listeners, which you are all welcome to join, there is quite the debate raging on. One of the owners asked in the group, “Hey, I’ve got an employee; he has been super loyal, been with me for about 15 years. How should I reward him?” And unfortunately, before I could get in or one of the AMI folks could get in and offer some advice, some well-meaning agency owners suggested that this owner make this employee an owner, that they gave him minority stock, phantom stock, regular stock, whatever. And I’m going to tell you that I jumped into the Facebook group and, in all caps, said, “NO, NO, NO.” Do not ever, ever, ever… I don’t care how amazing the employee is, do not give away a part of your company. So, anyone will take it when it’s free. Wanting to be an owner is a choice. And it’s a choice that most of us assume more people want than they actually do. So if you want to reward an employee for longevity, there are a lot of ways to do that. And I’ll do some videos on that in the coming weeks. But the way not to do it is to give them, to gift them, either a phantom stock or regular stock in your company. I can tell you hundreds of horror stories of agency owners who did that, thinking they were doing the right thing and instead had that employee still decide to leave, 5%, 10% of the company, still decide to leave and then the owner had to buy back their gift. Imagine giving somebody something that’s worth thousands, tens of thousands of dollars, giving it to them and then having to buy it back because they’re leaving you to go to another agency or another job. Do not fall into that trap. I know that you are looking probably for a succession plan. That’s another discussion altogether. But gifting your company, even 1%, is never a prudent choice. There are other ways to reward your employees without you taking the risk, and by the way, without you bringing someone into an ownership position of your company whether you have any idea if they want to own a business, if they’re qualified to own the business, if they’re qualified to be your successor. So don’t make this mistake. Don’t give it away. All right? I’ll be back next week. See you then.

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