David Koch the finance dude and co-presenter of Sevens Sunrise programe has a weekend show called "My Business" while he can be a zoober head sometimes I quite like him generally. So I watch the show even though Mel and Nat are not there to moderate him.
This week there was a bit about Red Baron a scenic and aerobatic joy flight business. The one thing that really stayed with me was how to keep contractors with you when they could work for almost anyone. I wonder what we can do with local IT Pros to help grow the commercial business I just don't have time to work on or in.
Here is what Julia Bickerstaff came up with...
Joel is really happy with his team of pilots who are contracted and paid per flying hour as well as for briefings on the ground. He believes they could easily work anywhere and doesn’t want to lose them as the success of the flying school depends upon them. He also knows that if they’re happy they’ll help promote the school but as a new business owner he can’t afford to pay exorbitant salaries. Our finance expert Julia Bickerstaff gave Joel some tips on incentivising employees.
Julia Bickerstaff: finance Top Gun
- Phantom share schemes work by giving a notional small percentage share of the business to each instructor. At the end of a given period of time, each instructor will be paid as a cash bonus the difference between what those shares are worth at the start and the end of the period.
- To set up a phantom share scheme you need to work out the way you’re going to value the business and use this method at all stages of calculating incentives.
- A share scheme like this can be used where traditional bonus methods are difficult to implement. For example, sales staff will often have key performance indicators based on number and value of new sales. What instructors do may not result directly in sales, so it may be better to have some employees on a performance-based incentive scheme and others on a phantom share scheme.
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