Profit sharing

matdand

Active Member
#1
Looking for ways to keep key employees AND making them responsible. Anyone ever set-up a profit sharing program? In Canada?

My bros worked for 1-800-GOT-JUNK and I think he got profit sharing at the end of every day. Didn't make him stay, but I remember him working harder to get the job done well and profitably.
 

ROYCE

Well-Known Member
#2
Looking for ways to keep key employees AND making them responsible. Anyone ever set-up a profit sharing program? In Canada?

My bros worked for 1-800-GOT-JUNK and I think he got profit sharing at the end of every day. Didn't make him stay, but I remember him working harder to get the job done well and profitably.
How about setting up a fund that you deposit into each week. This would be shown on everyones paycheck. This would be the bonus fund. Each week you put 150 dollars into an account to be split up among the employees at the end of the year.
When something is broken or misused and needs to be replaced it will be taken out of that account. Now, not the normal things that might brake anyways. But if one of your guys backs over the back pack blower then that would come out of the account. This allows employees to see that their actions will greatly increase, or decrease their pay.
This was an idea my business coach threw at me. I am going to start this Jan 1st. My problem is I am getting a lot of nice equipment. No one cares about the equipment like I do. However, everyone wants a bonus at the end of the year. This way they get their bonus, and I get a little more respect towards our equipment.
 

matdand

Active Member
#3
That seems like a good idea, but alot of management involved, especially for my accountant. I was thinking of going with some more broader scope, like every quarter putting 5% into a fund that the guys split at the end of the year. I've quickly read up on profit-sharing quickly, and it isn't as fast-tracked as that.
 

JustinK

Well-Known Member
#5
:)

I guess my point is that you can't MAKE someone responsible. They either are or they are not. I commend you for sharing the wealth or wanting to at least.

A company I worked for would give a monthly production bonus if a $$$ goal was met.

Ground workers- 50centz per hour
Climber- $1
Foreman- $1.50

So a climber hitting 40hrs a week would get a $160 bonus.

Did said company recently fell on tree on a car in England?
 

ROYCE

Well-Known Member
#6
That seems like a good idea, but alot of management involved, especially for my accountant. I was thinking of going with some more broader scope, like every quarter putting 5% into a fund that the guys split at the end of the year. I've quickly read up on profit-sharing quickly, and it isn't as fast-tracked as that.
Not really more management, just set it up in your books and it will do it automatically. Doesn't have to be done weekly, can be done any way you want. The idea is that your employees see an amount starting to add up and they will try and protect that from being depleted.
I don't like the idea of a production bonus. Does the crew pay you when the job is not done on time?
 

JustinK

Well-Known Member
#7
Not really more management, just set it up in your books and it will do it automatically. Doesn't have to be done weekly, can be done any way you want. The idea is that your employees see an amount starting to add up and they will try and protect that from being depleted.
I don't like the idea of a production bonus. Does the crew pay you when the job is not done on time?

If the job isn't done on time, it's obviously a sales issue :D


Only thing Ive been a part of was the Bartlett system that Levi mentioned....sorry just added that to not completely be off topic.
 

Mangoes

Well-Known Member
#8
Profit sharing?

Loss sharing?

Everyone will sign up for the former, no one would/will volunteer for the latter.

Memory serves that in '08-'09 it was "every man for hisself" south of the 49th.
 

treehumper

Well-Known Member
#9
There are some famous profit sharing examples out there, Lincoln Electric being one of them. Here's an interesting read about it. Be sure to read the comments (2) at the end in the white box. One in particular talks about the pitfalls of the plan. http://www.frankkoller.com/2015/12/...-82-straight-years-of-profit-sharing-bonuses/

Money in and of itself doesn't motivate. Take a look at this article at INC.com regarding profit sharing. http://www.inc.com/magazine/19961101/1864.html

Creating an environment where people will motivate themselves is a very challenging task. Each individual has their own needs, wants and affirmations. What will work for one doesn't necessarily work for another. Once bonuses are entrenched you'll find it difficult to rescind if the year didn't turn out too well. Bonuses have been used as a means to avoid giving a raise -- no payroll overburden or requirement to maintain that level of pay the next year. Monitor performance and then train to improve and reward with an increase in wages where the performance increases revenues. Bonus spontaneously, i.e., had a great week, throw a couple of bucks to your workers. Year end bonuses can be just appreciation gifts. Not tied to anything but your appreciation for them sticking it all out with you.

Coach and train on proper use, set up ways for equipment to be better managed to reduce risk of breakage or loss. Be on top of worn equipment. Replace it when it reaches a minimum threshold.

Share feedback from customers both good and bad. Affirm the good and then discuss the bad and brainstorm around how to improve. Engage your workers in that discussion so they have a greater sense of "ownership" of their processes.

The more your employees feel they are engaged in the overall operation of the company the more they'll feel ownership of the company.
 
#10
I was wondering if rewarding employees who show commitment to the business might also be done via continuing ed opportunities that can come from a company profits; opportunity to get more skills and certification translates potentially into positions that pay better. I agree that bonuses are kind of a slippery slope (and the tax folk take a big bite if it is reported as "bonus", I think). Maybe one exception would be for larger outfits who have one person who is almost exclusively doing sales and up-selling and the model works better to reward someone who is giving you a steady pipeline filled with business.

Helping out with getting training and certification for those starting out potentially has a more sustainable model for the industry as a whole.
 
#11
How about setting up a fund that you deposit into each week. This would be shown on everyones paycheck. This would be the bonus fund. Each week you put 150 dollars into an account to be split up among the employees at the end of the year.
When something is broken or misused and needs to be replaced it will be taken out of that account. Now, not the normal things that might brake anyways. But if one of your guys backs over the back pack blower then that would come out of the account. This allows employees to see that their actions will greatly increase, or decrease their pay.
This was an idea my business coach threw at me. I am going to start this Jan 1st. My problem is I am getting a lot of nice equipment. No one cares about the equipment like I do. However, everyone wants a bonus at the end of the year. This way they get their bonus, and I get a little more respect towards our equipment.
Reading through old forums as the night gets late... Royce how did this ever work out for you? And do you still do it? Sounds like something I might implement depending on how it worked for you.
 

treehumper

Well-Known Member
#12
I was wondering if rewarding employees who show commitment to the business might also be done via continuing ed opportunities that can come from a company profits; opportunity to get more skills and certification translates potentially into positions that pay better. I agree that bonuses are kind of a slippery slope (and the tax folk take a big bite if it is reported as "bonus", I think). Maybe one exception would be for larger outfits who have one person who is almost exclusively doing sales and up-selling and the model works better to reward someone who is giving you a steady pipeline filled with business.

Helping out with getting training and certification for those starting out potentially has a more sustainable model for the industry as a whole.
As a reward or recognition of needed skills development? If it’s a reward then you may be undermining the company overall. The person who would be getting the training is already contributing and in the end become the one whom you are most reliant on. The person who appears to not be committed to the company is the one who often needs the training the most in order to become a better, committed employee

Training and development should be an ongoing action that focuses on the assessment of gaps in employee skills. This means the manager/boss/crew leader needs to be monitoring skills and identifying where an employee needs training. In this way the company benefits overall. Some training that you may want to consider for engaging employees in the bigger picture could be business skills related instead of just technical skills.
Certifications on the other hand can be reward oriented as it is a recognition of ones level of development and skills.
 

Jem4417

Well-Known Member
#14
Bonus program. Say your day rate is 3000 dollars. If you bring in 4000 for the day you have 1000 dollar overage. So the owner takes half(500), sales rep takes (250), then the crew splits(250). If there is 1000 dollar underage where you only bring in 2000 dollars instead of the daily 3000, the owner takes a 500 hit from his bonus,the rep 250 and the crew 250. You pay the bonus each month
 

CanadianStan

Well-Known Member
#15
Bonus program. Say your day rate is 3000 dollars. If you bring in 4000 for the day you have 1000 dollar overage. So the owner takes half(500), sales rep takes (250), then the crew splits(250). If there is 1000 dollar underage where you only bring in 2000 dollars instead of the daily 3000, the owner takes a 500 hit from his bonus,the rep 250 and the crew 250. You pay the bonus each month
Good system to spread the profit and losses equally.
 

Boomslang

Well-Known Member
#16
Bonus program. Say your day rate is 3000 dollars. If you bring in 4000 for the day you have 1000 dollar overage. So the owner takes half(500), sales rep takes (250), then the crew splits(250). If there is 1000 dollar underage where you only bring in 2000 dollars instead of the daily 3000, the owner takes a 500 hit from his bonus,the rep 250 and the crew 250. You pay the bonus each month
I like it. With the stipulation that there is no "negative" bonus i.e. the crew never owes the owner money. That could open up a whole legal can of worms.

Sent from my LM-G710 using Tapatalk
 

Jem4417

Well-Known Member
#17
I like it. With the stipulation that there is no "negative" bonus i.e. the crew never owes the owner money. That could open up a whole legal can of worms.

Sent from my LM-G710 using Tapatalk
You take it from their overages not their hourly pay. You can hold half of the bonus throughout the year in their “account” and give it out at Christmas
 
#18
I hesitate to add anything to whats been said, but i will share what I am doing...

Bonuses are paid at the end of each month on the company profits over equipment payments.
It is calculated at a percentage of each employees' pay (to make it fair) for that month per 1000 of profit. How long the employee has been with the company is also figured in.

I believe that the money you invest in your employees pays big dividends. Discuss future equipment purchases with them. Make them feel that what they do and and say make a difference.

If you can afford it, pay vacation time and holidays, and don't work long days and weekends. I have found that then when you do work, you are working at maximum production and safety!

Final thought - What you focus on increases!
 

treehumper

Well-Known Member
#19
Bonuses can become a mind field that the owner then needs to navigate. For instance, in the case above, it’s great when you come out ahead on the day. Everyone will take credit. When it’s short, then who should really take the hit? Wa it a matter of under pricing by the salesperson, productivity of the crew or a planning/ equipment failure on the part of the owner?

What’s fair? Bonuses are complex and need to be understood completely when used as a motivational tool. Just look at the financial bailout of investment firms when they failed miserably. What came to light was billions being paid out as bonuses to the very people responsible for the failure. These were retention bonuses paid if you didn’t leave the company during the period.

Be sure they will have the intended effect you envision.
 

Jem4417

Well-Known Member
#20
Bonuses can become a mind field that the owner then needs to navigate. For instance, in the case above, it’s great when you come out ahead on the day. Everyone will take credit. When it’s short, then who should really take the hit? Wa it a matter of under pricing by the salesperson, productivity of the crew or a planning/ equipment failure on the part of the owner?

What’s fair? Bonuses are complex and need to be understood completely when used as a motivational tool. Just look at the financial bailout of investment firms when they failed miserably. What came to light was billions being paid out as bonuses to the very people responsible for the failure. These were retention bonuses paid if you didn’t leave the company during the period.

Be sure they will have the intended effect you envision.
Then management needs to start coming up with sayings like “share with the wins and share with the losses” or “trust the process” or “don’t worry we’ll save you the next homerun”
 
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