Small Business Tool Box: Aligning workers incentives with those of your small business

Wondering how to attract talent as a small business? Here are some reflections from my cousin, Francesco De Mojana who has a wealth of expertise in value creation and investments globally. Recently, he came to speak to students at Columbia University's School of International and Public Affairs (SIPA), where I teach. Here's a first reflection. To attract talent, businesses need to differentiate themselves. One way is to align incentives of workers with that of business owners both in terms of the Why and the Profits.

The WHY refers to purpose of the business. Are you serving customers in a special way? Are you contributing to environmental or social justice? Are you helping your community? THese are powerful reasons people may want to work with you as a small business versus a large company where purpose can get lost.

Aligning PROFIT incentives can also help either through bonuses, equity stakes or other short-term performance based rewards. Make sure these are structured to meet your staffing goals. For example, offering a profit-sharing plan that distributes a percentage of profits to employees can help build a stronger sense of ownership and loyalty among staff. This approach not only rewards workers when the company performs well but also motivates them to contribute to its long-term success. Additionally, providing tiered profit-sharing—where employees who stay longer or take on more responsibility receive a higher share—can encourage retention and skill development, aligning employee goals with the company’s growth and stability.