Looking to Retain Top Talent? Avoid Gimmicks in Favor of Meaningful Incentives

Discover the importance of long-term employee retention incentives in the HVAC industry, and how they can help contractors retain top talent amidst labor shortages.
Aug. 1, 2025
4 min read

The skilled trade industry faces a shortage of qualified laborers, with many HVAC contractors finding it challenging to fill key positions on their teams. What’s bad news for business owners is good news for talented employees, for whom the current labor market is ripe with opportunity.

Such conditions make it more important than ever for HVAC companies to retain their top talents — and more difficult. To help keep their all-stars from jumping ship, many home service leaders are turning to short-term incentive options, whether that’s cash bonuses or flashy commission structures. While such incentives are typically well-intentioned, they can be muted in their effectiveness. To employees, they may even feel like gimmicks.

When it comes to employee retention, HVAC contractors are better served by long-term incentive options, which help to demonstrate a much greater investment in the employee — and in the long-tail performance of the team itself.

Avoid Losing Top Talents to Strong Competitors

In many ways, demonstrating long-term commitment is the best thing an HVAC contractor can do to show their top talents how valuable they are — and to avoid losing those talents to competitors who may go all-in on short-term incentives.

Consider it this way: A short-term or one-time incentive reveals an employer’s commitment to recruiting an employee, but a longer-term incentive option reveals an employer’s commitment to developing that employee, providing them with a career path that can be personally and professionally rewarding for years to come.

This distinction is important for home service leaders who are focused on retaining their employees, even as competitors try to tempt them away with flash-in-the-pan performance incentives. An employee who does not feel like their employer is investing in them may well be enticed by a one-time bonus or a temporary show of appreciation, but employers who play the long game may give their employees a better reason to remain where they are.

How to Make a Long-Term Investment in Star Employees

When it comes to showing a long-term investment in top talent, HVAC leaders have a number of tools at their disposal.

One of the most effective is phantom stock. Phantom stock doesn’t require contractors to part with actual ownership stakes in the company, but it does allow them to incentivize employees in a way that’s directly connected to the company’s profitability.

Phantom stock works like this: Employees can earn phantom stock on the basis of their performance or longevity with the company, then choose to redeem their stock at any point. The value of the phantom stock mirrors the actual stock market value of the company at any given moment.

When they accrue phantom stock, employees experience many of the advantages of ownership, without any requirement for the contractor to actually issue real stocks or dilute their owning interest in the company. Additionally, phantom stocks provide a sense of “skin in the game” for employees, giving them a real bottom-line reason to care about the greater good of the business itself.

Issuing phantom stock is just one of the options available to contractors who wish to show a meaningful investment in employee retention. Consider also retention bonuses, which are usually paid in installments as employees reach different milestones of longevity. Performance shares can be issued and vested when the business meets a specific performance goal—for example, a certain level of revenue—making them similar in nature to phantom stock. Still another option to consider is profit sharing, which lets employees get a direct cut of company profits, either in cash or as deferred contributions to a retirement plan.

Valuing Employees Long-Term

Each of these incentive options has its own advantages, and what works well for one HVAC contractor may not work as well for others. The important thing is finding a good way to show employees that they matter—not just in the moment, but over the long arc of their career.

Why? For one thing, these incentive ideas can all be tied to employee performance, allowing employers to demonstrate a commitment to seeing their personnel grow, develop, and enhance their skillsets. Additionally, long-term incentives are invariably tied to tenure—meaning they underscore how fidelity is seen and rewarded. And, long-term incentives can align with broader business performance, too, which gives employees a greater sense of buy-in.

Simply put, employees want to feel like their work matters to the organization, and that their skills are seen and appreciated—and short-term incentives don’t convey that nearly as well as these long-term alternatives. When it comes to keeping top talents in place, reducing employee churn and turnover, taking the longer view is crucial.

About the Author

‍Chris Buttenham

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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