By Chris Buttenham
For skilled trade companies, there’s no resource more precious than skilled tradespeople themselves—field technicians whose dedication to their craft ensures quality workmanship and high levels of customer satisfaction.
These technicians propel skilled trade companies toward ongoing success. Conversely, the loss of a talented technician can have damaging effects on a team’s morale, on productivity, and on the bottom line. Employee turnover is costly for any business, but it can be especially so in the skilled trades, simply due to the high level of training and credentialing that employers must replace any time a technician leaves.
To minimize the costs of turnover, it’s important to take a proactive approach to employee retention—and that means thinking strategically about how to incentivize top talents, keeping them happy and engaged with their work for months and years to come.
Budgeting for Goal-based Incentives
One of the most effective ways to keep technicians engaged with their work is by providing them with monthly or quarterly milestones to work toward—and to provide some type of incentive for achieving key benchmarks.
Specific goals can be displayed on a real-time goal board for each technician, and may include any number of metrics—for example:
- Achieving a high customer satisfaction average.
- Achieving a consistent level of on-time arrivals.
- Obtaining a certain number of online reviews from satisfied customers.
- Upselling particular products, monthly promos, or bundled service offerings.
Technicians who hit their goals should know about the rewards and incentives that await them. Incentives, different from bonuses, are designed to elicit a positive change in behavior and reward the recipient when doing so. This can be a win-win scenario compared to some bonus structures that can turn into an expectation or an entitlement without any performance condition.
Consider: Additional funding toward a tool account provides a way for technicians to leverage their performance for upgraded and up-to-date equipment—allowing them to continue doing their job at the highest level. Funding toward professional development accounts can be similarly beneficial, demonstrating a concrete investment in employees’ long-term performance.
Incorporating Phantom Stock
Often, the most effective employee incentives are the ones connected to overall business performance. This provides technicians with a clear motive to maintain rigorous standards of quality in their work, and to facilitate positive customer relationships—knowing that when the company does well, the technicians are compensated accordingly.
One of the most powerful means for linking employee incentives with the company’s bottom line is to provide phantom sock. Phantom stock is not literal stock—employees do not receive actual shares—yet they do provide a way for employees to benefit from the company’s upside. Employees may accrue phantom stock and redeem at a time of their choosing, receiving compensation relative to the company’s current share price.
In other words, phantom stock is a great way to provide employees with some of the advantages of ownership without providing actual ownership—and while phantom stock has most commonly been offered to executives, it can also be a meaningful way to incentivize skilled trade technicians, making it worth their while to stick with the company and to commit their efforts to its ongoing success.
Considering Other Long-Term Payout Options
Phantom stock is just one example of creative payout options that can be used to incentivize employees over the long term. Consider a few additional ways to compensate employees over time:
- With Restricted Stock Units (RSUs), employees are awarded company shares that vest at a particular point in time, usually based on employee performance or key milestones.
- Similarly, performance shares may be awarded, vesting only when the company meets particular performance goals. These may be growth goals, total revenues, or something else.
- Retention bonuses are another option; these cash bonuses are paid over time, in installments, as employees hit certain goals of tenure and longevity.
- With profit sharing, employees receive a direct cut of company profits, either as cash or as deferred contributions to a retirement plan.
While each type of long-term payout model has its unique pros and cons, they all share a few common advantages. For the business, these advantages include retention of top talents, and an alignment of interests between technicians and the business owner. Additionally, by motivating employees to be intentional and goal-oriented in their performance, these payout models can motivate leadership behaviors.
For employees, the most obvious advantage is added income—yet there is also something to be said for the value of confirming to employees that they bring real value to the team, and that their skills and competencies are desired over the long haul. This confirmation can serve as a powerful driver of morale and employee loyalty.
Investing in the Future
In the skilled trades, having top talent matters deeply—and the cost of employee turnover may be considerable. In light of this cost, one of the smartest investments a skilled trade company can make is incentivizing employee retention, providing a clear motive for technicians to stick around for a long time to come.
Chris Buttenham is co-founder of Reins, a pioneering technology firm founded in 2023 dedicated to empowering small businesses through modern equity solutions. Reins’ proprietary solution, the Modern Agreement for Rewards and Equity (MARE) program, was built by attorneys and is customizable to meet each business owner’s needs.
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