How the Rolls Royce Model compares to other top incentives for retaining your best talent post reorganisation

Last month the Unite Union secured an eye-watering 17.6% salary pay deal at the Rolls Royce Goodwood car plant. In a winter of discontent (where the cost of living crisis is biting, and the public sector is seeing strike action intensify), this seems like an absolute coup for employees feeling hard done by. 

Every industry has its miseries. For example, two years ago, nurses were gripped in the spirit of can-do camaraderie through the COVID-19 pandemic; however, fast forward to today, they have become burnt out and desperate for much-needed support. Postal and railway workers have also felt the brunt of becoming completely 'side-lined' by management. No sector is immune from the pain, and it's usually felt on both sides.

The private sector is no different, with the measure of employee satisfaction levels becoming a top priority. Imagine; you have just bought your dream company. It slots perfectly into your Boards' Group projections for the following Financial Year, and the completion signatures on the Share Purchase Agreement are still wet. However, it has become apparent that your prospective employees (whether skilled management or technical experts) are seriously not happy. Whilst the Rolls Royce model of financial Incentivisation (i.e. a straightforward hefty pay rise) is evident in its success, it's not the only one that exists for you as a director. It's certainly not the best in every case and not the most creative. Here are but a few that a corporate lawyer can help you with: 

• Enforce and draft a bonus scheme using the appropriate metrics to drive the management team and other employees toward your desired direction. Contractual entitlement could be calculated by reference to the company's earnings before interest, tax, depreciation and amortisation.
• Share awards can be drafted, put in place, and structured in many intricate and straightforward ways. A long-term incentive plan could entitle employees to acquire shares in the company if certain conditions are met. Senior employees are typically allowed to acquire shares in the company and participate as shareholders going forward, leading to a more substantial alignment of their interests with the business. In all cases, such arrangements can enjoy lucrative tax breaks and enable staff to draw down from the business success they are helping to create. It's potentially a win-win scenario.
• Culture perks drafted into senior managers' service agreements or employment contracts could be another option. This is becoming popular because more and more employees are considering more than just money as incentivisation. Examples include working from home, giving employees greater flexibility (thus a better work/life balance), or even employee bonding opportunities. Cultural perks are where a company can really show off its imaginative persona by showing its talent and its senior management that it cares about the employee's well-being.

On a risk analysis, it's crucial to understand that reliable employees are potentially your most important asset, and your reorganisation's success may come down to this one sole consideration. Talent is an increasingly frequent deal driver in corporate transactions; there are no two ways about it.

Interestingly, the new CEO of Rolls Royce recently announced in the Financial Times that the company was standing on "a burning platform", telling employees they must transform how it operates to survive.

Please contact us for additional information on Bonus Schemes, Share Option Schemes, Culture Perks, and other available incentives. We can advise and suggest the best methods based on your business model and current circumstances. Please get in touch with our Company Commercial or Employment team on 023 8071 7409 or email naushadrahman@warnergoodman.co.uk.