Direct answer: Should you hire top talent when you find them on the market? Yes, if they bring 10x their salary to bottom-line profit. Use phantom equity tranches, sign your accounting team to an NDA, and have honest upfront conversations about limitations.
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When You Find The Dream Employee On The Market
When it comes to being in business, one of the conversations that comes up more frequently than imagined is — should you hire top talent when you find them on the market? You have found somebody who is really good at what they do. They are available. Should you hire them?
You get the dream employee — the person you have always wanted to hire. They have all the skills, all the talents, all the capabilities. But you also get the butterflies in the stomach. Should I actually pull the trigger? The answer depends on why they left their last position, what value they bring to your bottom line, and whether you can protect them from the office politics that will inevitably show up the moment they arrive. This concept sits inside the Exit Ratio 360™ system as one of the highest-leverage moves available to a growing business.
Why Top Talent Actually Leaves Their Current Company
Top talent gets burned out. They get tired of the games, the shenanigans, the backstabbing, and the office politics. Sometimes they look around and think — it would be much easier to work for a smaller company. I might even be willing to get paid less if the environment is right.
If that is the case, it is worth a conversation. The question you need to answer honestly is:
- Are they leaving because they got burned out on politics they will find at your company too?
- Are they leaving because the last environment was uniquely dysfunctional and yours is better?
- Are they leaving for reasons related to their capabilities not being appreciated?
- Are they leaving for reasons related to their capabilities not being enough?
The last question matters most. Sometimes top talent is not actually top talent — they just carried a reputation that outperformed their actual output. Reference-checking hard on why they are on the market matters.
The Rocket Fuel Reframe
Here is the reframe. When you find somebody with top skills, top talent, and top capability — ask yourself what rocket fuel this person could give the business.
People get caught up on how much employees make relative to other employees. This person makes more than that person. This person makes more than me. At the end of the day, what most owners are not really considering is: what result does this person bring to the bottom line of the business?
Somebody bringing $3 million in bottom-line profit contribution while making $300,000 in salary is not overpaid. They are undermined-underpaid by 10x. The comparison to other employees is irrelevant. The comparison to the value they produce is the only comparison that matters.
The Accounting Department Pattern — And The NDA Fix
Here is a pattern I have seen so many times. A top salesperson gets chased out of a company because they make too much money. You know who complains the most? Accounting. Not the person driving the business. Not the CEO. The person looking at the check.
Accounting has a specific viewpoint — costs relative to costs. They see the salary line. They do not see the revenue attribution. They see what leaves the bank account. They do not see what enters it because of this specific person.
Here is a strategy that helps — and I am not a doctor, lawyer, attorney, marriage counselor, or therapist, so verify with qualified professionals. Anybody in the accounting team signs a non-disclosure agreement. They cannot talk about how much people make. They cannot talk about what you pay for products, services, goods, or terms. It helps shut this conversation down.
When an accountant comes to you and says — my goodness, look how much money this person is making — the response should be: look what value they bring to the bottom line. That reframe converts a compensation conversation into a value conversation. If they cannot answer the value question, they should not be having the compensation conversation.
The 10x Bottom-Line Test
Here is the specific test to apply when accounting or anyone else raises the compensation concern:
| Value Delivered | Correct Response |
|---|---|
| They bring 10x their compensation to bottom-line profit | Let the compensation conversation go. Pay them. Keep them. Protect them. |
| They bring 5-10x their compensation to bottom-line profit | Solid value. Keep the compensation. Address anyone complaining with the value reframe. |
| They bring 1-3x their compensation to bottom-line profit | Break-even to marginal contributor. The compensation concern is legitimate. Have a real conversation. |
| They are not doing the job, role, or function | It is perfectly acceptable to note how much money they are making. Compensation is the wrong question — performance is the right question. |
Note the specific distinction — bottom-line profits, not just top-line revenue. Salespeople who bring in $10 million in revenue at 5% margin bring $500,000 in bottom-line contribution. Salespeople who bring in $3 million in revenue at 40% margin bring $1.2 million. Higher-margin revenue is more valuable than higher-volume revenue at bottom-line evaluation. Bankable money is the metric that matters.
For related context on how bottom-line contribution translates to exit multiples, see what is a profit multiple in an LOI contract.
Paying Above Market As A Signal
When you pay above market for top talent who deliver 10x, you send a signal to the market. You are not playing games. You have the right people at the right time in the right place. You are a force to be reckoned with.
Other companies notice. Other top talent notices. The people who work with your top hire and see them appropriately compensated raise their own standards. The people who compete with you notice that you can attract and retain talent they cannot. Above-market compensation for genuine top talent is not a cost — it is a market-positioning investment.
The Interview Conversation That Reveals Everything
Sometimes the conversation comes down to — what do I even talk to them about? Ask them directly:
- Why are you leaving?
- Why do you want out of the company?
- Why do you want out of the situation?
- What is not working there that you hope will work here?
- What would need to be true for you to stay somewhere long-term?
They will tell you. Top talent has usually thought about this specifically because they made the decision to be on the market. Their answers reveal whether their reasons are structural (they need something you can provide) or personal (they need something you cannot).
The Honest Pitch That Attracts Real Talent
Once you are ready to make an offer, here is the honest pitch:
If you come here, we are going to be slower than the company you just left. We are going to have to work on support systems. There are going to be challenges. We want you to know that up front. We do not want you to come here and be frustrated. We need an open line of conversation.
There might be things I do not know as a business owner. Some of these might be coaching conversations for me. That last piece is what separates the honest offer from the sales pitch. Owners who acknowledge they will need coaching from the top talent they hire attract dramatically better candidates than owners who pretend they have everything figured out.
If they say yes to that honest pitch — gosh dang it, ride the lightning. Do everything you can to get that person on board. Get them off the market so you can excel.
The Office Politics You Must Squash Immediately
Once the hire lands, you are going to have to squash problems. Specifically:
- The drama with the accounting department about compensation
- The “this person came in and thinks they are in charge” reaction from existing team
- The passive-aggressive resistance from people whose work will now be measured against the new hire’s output
- The rumor mill about why this person was hired when existing employees could have been promoted
Office politics can stop the new hire from having success in your business regardless of their skill. Your job as the owner is to squash the politics before they damage the hire. This includes public support of the new person, immediate correction of resistance behavior, and clear communication of why this person was brought in. For the accountability infrastructure that makes this easier, see how to implement accountability for growth, scale, or exit.
The Three Compensation Options
How do you pay them? There are three primary options:
| Compensation Structure | How It Works | Best For |
|---|---|---|
| Full ask salary | Pay them the amount they are asking directly in cash compensation | Owner has cash flow to support and wants simplicity |
| Bonus based on KPIs | Pay base salary plus performance bonuses tied to specific measurable outcomes | Owner wants performance-linked compensation and has clear KPIs |
| Phantom equity | Promise of future payment based on tenure and performance triggers | Owner wants to link compensation to exit outcomes and preserve cash |
Phantom Equity Explained — And How To Structure It
Phantom equity is a promise of paying somebody into the future. They do not incur taxes when the equity triggers (only when they receive the cash). You do it in tranches, or you do it as they earn it. It is not a lump sum. They get this amount every year based on tenure and KPIs.
I have seen a lot of times where people just offer equity for the sake of offering equity — and it comes back to bite them. The right structure ties phantom equity to outcomes. Handcuffs based on what they bring to the table. What is the specific outcome they are helping you achieve? That is what you need to be able to say.
If you find top talent and it costs you a couple of points now, those points get multiplied when you go to exit your business. Or it gives you the lift you have been looking for for years. Dave Lakhani was one of my first mentors, and he would always say — money buys you speed. Money buys you speed. Phantom equity can buy you speed too.
You definitely want to talk to an accountant and attorney about how to structure phantom equity. I can share the concept with you on video. But you want real resources for the actual implementation. This is exactly the kind of decision what your CPA should have been doing for the last 5 years covers.
The AI Application For Working Backwards Math
Here is a specific tactical move. Drop something like this into AI:
“I have a $10 million company. I can hire a person who makes $300,000 a year. I can pay them $200,000. What should I expect that they bring to the table? What could they bring to the table?”
Then base your offer on the working-backwards math. AI can help you model the specific value contribution scenarios that would justify the hire. Not perfect — but a directionally useful starting point for the conversation with your accountant and attorney about how to structure the actual compensation.
If you are looking to sell your business in the next zero to thirty-six months, doing at least $2 million a year in revenue with a ten percent profit margin, the deal hotline is 888-DEAL-919. One of the team members will get back to you. No deal is too big.
The Urgency That Should Move You
Any time you find top talent on the market — if you are not going to take them, somebody is. You better hope it is not your competition. You better hope that at the end of the day, you find a way to bring that person on board.
Have the tough conversations with them up front. What you are looking for. What they are capable of. What problems you have inside the business. Then go from there. Top talent hired well pays for itself many times over. Top talent hesitated on and lost to a competitor costs you both the value they would have added and the value they will now add to somebody else’s business.
Related cluster reading: how to identify key personnel risk before selling your business, why the Foundational Four allows you to sell your business or take vacation, how to implement accountability for growth, scale, or exit.
Frequently Asked Questions
Should you hire top talent when you find them on the market?
Yes, if the working-backwards math shows they can bring 10x their compensation to your bottom-line profit. Understand why they left their last position, have honest upfront conversations about your business limitations, structure compensation to align with outcomes (phantom equity works well), and squash the office politics that will emerge immediately after the hire.
Why does the accounting department complain about top talent salaries?
Because accounting sees costs relative to costs, not costs relative to value produced. They see the salary line leave the bank. They do not see the revenue and bottom-line contribution the person creates. The pattern is universal enough that top salespeople frequently get chased out of companies not by the CEO, but by accounting complaining about their compensation.
What is the 10x bottom-line test for evaluating a top talent hire?
The test is whether the person brings at least 10 times their compensation to bottom-line profit — not top-line revenue. A person making $300,000 who contributes $3 million in bottom-line profit passes the test. Higher-margin revenue counts more than higher-volume revenue. Bankable money at the profit line is the metric that determines whether the compensation is justified.
Why should your accounting team sign an NDA about salaries?
Because compensation gossip from accounting frequently drives top talent out of companies before they can produce their full value. An NDA covering compensation, product costs, service costs, and vendor terms shuts down the pattern. It also reframes the accounting conversation from “look how much they make” to “look what value they bring to the bottom line.”
What should you ask a top talent candidate during the interview?
Ask why they are leaving. Why they want out of the company. Why they want out of the situation. What is not working there that they hope will work at your business. What would need to be true for them to stay long-term. Top talent has usually thought about these questions specifically and will give you honest answers that reveal whether their reasons are structural or personal.
What honest challenges should you tell top talent about your business?
Tell them: we are going to be slower than where you came from, we need to work on support systems, there will be challenges, and some of these will be coaching conversations for me as the owner. That last piece — acknowledging you will need to be coached by them — separates honest offers from sales pitches and attracts dramatically better candidates.
What are the compensation options for hiring top talent?
Three primary structures. One, pay their full ask in cash compensation — simplest for owners with cash flow. Two, base salary plus KPI-linked bonuses — links compensation to measurable performance. Three, phantom equity in tranches based on tenure and performance — links compensation to long-term outcomes and preserves current cash flow.
What is phantom equity and how does it work for top talent?
Phantom equity is a promise of future payment based on tenure and performance triggers. The employee does not incur taxes when the equity triggers — only when they receive the cash. It is paid in tranches or as earned, not lump sum. Amounts scale with tenure and KPI performance. Structure it with your accountant and attorney to align with specific outcomes rather than time alone.
How can top talent hires increase your business exit multiple?
Top talent who deliver 10x their compensation contribute directly to EBITDA growth, which multiplies the exit valuation. A hire that costs $200,000 annually and produces $2 million in additional profit adds roughly $1.8 million to annual EBITDA. At a 5x multiple, that translates to $9 million in exit value from a single well-structured hire.
What happens if you don’t hire top talent when you find them?
Somebody else will. You better hope it is not your competition. Top talent on the market rarely stays on the market long. If you hesitate, the person will land somewhere — often at a competitor where they will add value to their business instead of yours. The urgency to move on qualified top talent is real, not manufactured pressure.
Full Transcript
When it comes to you being in business, one of the conversations that comes up more frequently than imagined is — should I hire top talent, or I found somebody who is really good at what they do, they are on the market, and should I hire them? You are going to find there are a couple of answers to this. They are going to help you, but you have some decisions to make. I am Scott Sylvan Bell coming to you live from Consulting Secrets on a perfect day to talk about the perfect employee, hiring top talent, and a fantastic day to talk about you. I am coming live from Sacramento.
As time goes on, sometimes you get the dream employee. The person you have always wanted to hire. They have all the skills, talents, and capabilities. But you get the butterflies in the stomach. Should I hire them? There are a couple of different ways to treat those based on why they left. Top talent sometimes gets burned out. They get tired of the games, the shenanigans, the backstabbing, the office politics. Sometimes they look around and go — it would be much easier to work for a smaller company, and I might be willing to get paid less. If that is the case, it is worth a conversation.
Or you can look at it this way. If I find somebody who has got top skills, top talent, and top capability — what rocket fuel could this give the business? People get caught up on how much employees make. This person makes more than that person, and this person makes more than me. At the end of the day, what you are not really considering is what result do they bring to the bottom line of the business?
I have seen this so many times where a top salesperson is getting chased out of a company because they make too much money. You know who complains the most? Accounting. Not the person who is driving the business. The person who may be looking at the check. As a strategy, one of the things you might want to put in place — and I am not a doctor, lawyer, attorney, marriage counselor, or therapist — is to say anybody who is in the accounting team has to sign a non-disclosure agreement. They cannot talk about how much people make. Cannot talk about what we pay for products, services, goods, terms. It does help shut this conversation down.
If an accountant comes to you and says — my goodness, look how much money this person is making — the statement should be: look what kind of value they bring to the bottom line. Are they bringing 10 times their value to the bottom line? Then you are going to have to let it go. If they are not doing a job, they are not doing a role, they are not doing a function, then it is perfectly acceptable to say — look how much money this person is making. But if they are driving bottom-line profits, not just top-line revenue, and it is bankable money, then you may benefit by paying more than the market. It is a signal to the other companies that you are not playing games, that you have the right people at the right time in the right place. You are a force to be reckoned with.
Sometimes the conversation comes down to — what do I talk to them about? Ask them why are you leaving? Why do you want out of the company? Why do you want out of the situation? It seems like everything is good. They are going to tell you. Then what you can say is — if you come here, we are going to be slower. We are going to have to work on support. There are going to be a couple of challenges. We want you to know that up front. We do not want you to come here and be frustrated. We need to have an open line of conversation.
There might be things that I as a business owner do not know, so some of this might be coaching conversations for me. If they say yes — gosh dang it, ride the lightning. Do what you can to get that person on board and get them off the market so you can excel. Now you are going to have to squash the problems in the office. The drama with the accounting department. This person came in and they think they are in charge. Some of the office politics you are going to incur may stop that person from being able to have success in the business.
How do I pay them? There are a couple of different ways. You can pay them the full amount they are asking. You can bonus them out based on KPIs. Or you could do this thing called phantom equity. Phantom equity is a promise of paying somebody into the future, so they do not incur taxes when they get paid, or when that equity triggers. You do it in tranches, or you do it as they earn it. It is not just a one lump sum. You get this amount every year based on how long you are here, based on your KPIs.
I see a lot of times where people just offer equity for the sake of offering equity, and then it comes back to bite them in the rear end. If you can find some top talent and it is going to cost you a couple of points that are going to be multiplied when you go to exit your business, or it gives you the lift you have been looking for for years — there is a guy named Dave Lakhani. Dave Lakhani was one of my first mentors, and he would always say — money buys you speed. Money buys you speed. Phantom equity can buy you speed.
You definitely want to talk to an accountant and attorney about how to structure this. I can share with you on video. But you want real resources. You want to have that conversation. You do want to have some handcuffs based on what they are bringing to the table. The outcome. What is it that they are doing to help you achieve what you need to achieve? If you can say — I am bringing this person on board, here is what I project they can do for a lift for the company, here is what I am willing to give for that lift.
You can drop something like this into AI and say — I have a $10 million company. I can hire a person who makes $300,000 a year and I can pay them $200,000. What should I expect they bring to the table? What could they bring to the table? Then you could base it off of some working-backwards math.
Any time you find top talent on the market — if you are not going to take them, somebody is. You better hope it is not your competition. Find a way to bring that person on board. Have the tough conversations with them up front about what you are looking for, what they are capable of, and what problems you have inside of the business. Then go from there.
