Profit sharing

[JD3000]

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”

Yeah, and "never make the last out at third" and "never trust an albino Bulgarian."

 

[Jem4417]

Yeah, and "never make the last out at third" and "never trust an albino Bulgarian."

All acceptable

 

[JE Chop Nash]

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!

This will be our first year for a profit share. It’s an investment in our team that we’re willing take the risk for because good people do good work and help us get and retain the best clients.

100% culture and people make or break the business. And it’s the people that make it worth being in business anyways. We started paying better attention to the quality of culture and life at our business and it made a positive difference in our productivity as well. We simply started with a weekly company lunch and making it a goal to leave job sites at a decent hour. This year we’ve bought the nice equipment and honestly without the team the equipment would just be expensive toys.

 

[Fivepoints]

I've been trying to figure out a fair way to do this without a bunch of pitfalls.

 

[MikePowers321]

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.

That sounds like a pretty good idea, Royce. You think it would get a little messy for companies with a high turn over rate? Probably ideal for smaller crews that stick together for the most part?

 

[Jem4417]

Production bonuses really only work with removal crews. Pruning jobs have smaller margins and can be bid as “spend the day here”. Plus the pruning crews are more physically strenuous unless your removals are all manual which I’m assuming for this thread their not. It’s a slippery slope that can turn manipulative rewarding some and overworking others. Maybe try giving crew leaders 2% of what they complete or another percentage. Gives them inventive and makes the employees want to work for the crew leader spot.

 

[ROYCE]

Production bonuses really only work with removal crews. Pruning jobs have smaller margins and can be bid as “spend the day here”. Plus the pruning crews are more physically strenuous unless your removals are all manual which I’m assuming for this thread their not. It’s a slippery slope that can turn manipulative rewarding some and overworking others. Maybe try giving crew leaders 2% of what they complete or another percentage. Gives them inventive and makes the employees want to work for the crew leader spot.

I disagree! On a pruning job in our organization we can make a lot more profit than the larger removal jobs. With a two person crew, bucket truck, chip truck and chipper your over-head is very low on that crew. Compare that to our crane crew consisting of crane, log tuck, chip truck and chipper, track loader and bucket truck and 4 employees.
What we have been doing is a bonus structure as follows. This has been working great for us. This is only eligible to fully invested employees. You are not invested in the company until you have been with us for a year.
I, the owner set a production goal in dollars. Lets say its 1.5 Million that I want to make by years end. Then..I set a reward for the crew. I say...if we reach 1.5 Million in production then I will pay a 50,000 bonus that is split by all invested employees. Then, if they break anything because of improper use, or carelessness..that is taken from the bonus. This year at bonus time they had 3100 that was deducted from the bonus payout.
Now, lets say that we only 1,200,000..then they would receive 80% of the 50,000 bonus. Because we only reached 80% of our projected revenue. But..that also goes the other way. If we ended up fishing the year at 1.8 million then they would get the 50,000 bumped up to 60,000 because they did 20% more than the projected amount.
What this has instilled in my business is cooperation, teamwork, and an understanding that we have a limited amount of resources and the better that we manage them, then the more we have for each other at the end of the year. You have to remember that this is a bonus and is addition to above industry pay, great benefits, great equipment to use, and a great environment to work in.
This is just what has worked for my business.

 

[Jem4417]

I disagree! On a pruning job in our organization we can make a lot more profit than the larger removal jobs. With a two person crew, bucket truck, chip truck and chipper your over-head is very low on that crew. Compare that to our crane crew consisting of crane, log tuck, chip truck and chipper, track loader and bucket truck and 4 employees.
What we have been doing is a bonus structure as follows. This has been working great for us. This is only eligible to fully invested employees. You are not invested in the company until you have been with us for a year.
I, the owner set a production goal in dollars. Lets say its 1.5 Million that I want to make by years end. Then..I set a reward for the crew. I say...if we reach 1.5 Million in production then I will pay a 50,000 bonus that is split by all invested employees. Then, if they break anything because of improper use, or carelessness..that is taken from the bonus. This year at bonus time they had 3100 that was deducted from the bonus payout.
Now, lets say that we only 1,200,000..then they would receive 80% of the 50,000 bonus. Because we only reached 80% of our projected revenue. But..that also goes the other way. If we ended up fishing the year at 1.8 million then they would get the 50,000 bumped up to 60,000 because they did 20% more than the projected amount.
What this has instilled in my business is cooperation, teamwork, and an understanding that we have a limited amount of resources and the better that we manage them, then the more we have for each other at the end of the year. You have to remember that this is a bonus and is addition to above industry pay, great benefits, great equipment to use, and a great environment to work in.
This is just what has worked for my business.

Sounds like you have made an account for likely damages and or injuries that is a percentage of your overall production that you pay out to employees if unused. It’s not based on individual or crew production but rather the entire fleets commitment

 

[MikePowers321]

I disagree! On a pruning job in our organization we can make a lot more profit than the larger removal jobs. With a two person crew, bucket truck, chip truck and chipper your over-head is very low on that crew. Compare that to our crane crew consisting of crane, log tuck, chip truck and chipper, track loader and bucket truck and 4 employees.
What we have been doing is a bonus structure as follows. This has been working great for us. This is only eligible to fully invested employees. You are not invested in the company until you have been with us for a year.
I, the owner set a production goal in dollars. Lets say its 1.5 Million that I want to make by years end. Then..I set a reward for the crew. I say...if we reach 1.5 Million in production then I will pay a 50,000 bonus that is split by all invested employees. Then, if they break anything because of improper use, or carelessness..that is taken from the bonus. This year at bonus time they had 3100 that was deducted from the bonus payout.
Now, lets say that we only 1,200,000..then they would receive 80% of the 50,000 bonus. Because we only reached 80% of our projected revenue. But..that also goes the other way. If we ended up fishing the year at 1.8 million then they would get the 50,000 bumped up to 60,000 because they did 20% more than the projected amount.
What this has instilled in my business is cooperation, teamwork, and an understanding that we have a limited amount of resources and the better that we manage them, then the more we have for each other at the end of the year. You have to remember that this is a bonus and is addition to above industry pay, great benefits, great equipment to use, and a great environment to work in.
This is just what has worked for my business.

Good on you, Royce. Many people are short sighted in terms of money and production. Keeping employees paid well and with good incentives creates a more unified, and satisfied team. Nothing like a well oiled machine, with a couple good belly laughs

 

[ROYCE]

Sounds like you have made an account for likely damages and or injuries that is a percentage of your overall production that you pay out to employees if unused. It’s not based on individual or crew production but rather the entire fleets commitment

Yes..that is correct. Its teamwork idea I try and press. That we can all achieve more, and do better when we all work together. There are times the bucket crew finishes early and then goes and helps the crane crew finish up a job if they are running behind. Teamwork makes the dream work!!

 

[ROYCE]

Good on you, Royce. Many people are short sighted in terms of money and production. Keeping employees paid well and with good incentives creates a more unified, and satisfied team. Nothing like a well oiled machine, with a couple good belly laughs

Thank you! The belly laughs are the most important!!

 

[Jem4417]

Yes..that is correct. Its teamwork idea I try and press. That we can all achieve more, and do better when we all work together. There are times the bucket crew finishes early and then goes and helps the crane crew finish up a job if they are running behind. Teamwork makes the dream work!!

I agree that this can be effective. What I have found is it’s very hard to reward individuals for maximum personal production because of challenges quantifying it. Also recording it in real time. Building strong teams is important but when multiple (3,4,5) crews are at a company the talent gets “spread out” making it unfair to top performers because of their handicap by incompetent coworkers

 

[Pacafist]

I agree that this can be effective. What I have found is it’s very hard to reward individuals for maximum personal production because of challenges quantifying it. Also recording it in real time. Building strong teams is important but when multiple (3,4,5) crews are at a company the talent gets “spread out” making it unfair to top performers because of their handicap by incompetent coworkers

Going to have to agree with Jem4417 on this one. From what I’ve experienced personally there will be certain crews dedicated to certain jobs. Type casted,if you will, (some that will be devoted to removals, then some for large, very specific, pruning jobs, and then some for small pruning and shearing jobs, even down to one man jobs for stump grinding and fixups and such). I’ve seen it happen where, even though it is meant to be an incentive, there will always be crews who work harder on underbid jobs for pruning who are trying to meet their deadlines for the projected time on the job, and then you get removals, where one can just drop the tree and get the job done in half the amount of time bid for the job. Like Jem4417 said:the talent gets spread out. And the employees start to become disgruntled because one crew is working half as hard as the other and the other crew is “losing money” but working twice as hard and not being recognized for their hard work. Theoretically it’s a nice idea, but when it’s played out with 3+ crews it starts to ruin people. The stress of making the money in time for a bad bid gets to the best of the leaders and ruins them as people. I’ve seen it happen to at least five crew leaders within a timespan of 1 1/2 years only. It’s bad, and it makes others not want to take on the responsibility of being a crew leader for fear of the pressure associated with it

 

[ROYCE]

Going to have to agree with Jem4417 on this one. From what I’ve experienced personally there will be certain crews dedicated to certain jobs. Type casted,if you will, (some that will be devoted to removals, then some for large, very specific, pruning jobs, and then some for small pruning and shearing jobs, even down to one man jobs for stump grinding and fixups and such). I’ve seen it happen where, even though it is meant to be an incentive, there will always be crews who work harder on underbid jobs for pruning who are trying to meet their deadlines for the projected time on the job, and then you get removals, where one can just drop the tree and get the job done in half the amount of time bid for the job. Like Jem4417 said:the talent gets spread out. And the employees start to become disgruntled because one crew is working half as hard as the other and the other crew is “losing money” but working twice as hard and not being recognized for their hard work. Theoretically it’s a nice idea, but when it’s played out with 3+ crews it starts to ruin people. The stress of making the money in time for a bad bid gets to the best of the leaders and ruins them as people. I’ve seen it happen to at least five crew leaders within a timespan of 1 1/2 years only. It’s bad, and it makes others not want to take on the responsibility of being a crew leader for fear of the pressure associated with it

That can all be avoided with a good salesman. If your having 5 crew leaders leave or get upset in a year and a half span...your problem is not the bonus structure. It sounds like your sales department is setting unrealistic expectations or not fully understudying what is involved with the job. I see that happen a lot with larger companies. You have several salesmen and one or two of them are not actually field trained and they have unrealistic time frames and expectations.

 

[Jem4417]

Going to have to agree with Jem4417 on this one. From what I’ve experienced personally there will be certain crews dedicated to certain jobs. Type casted,if you will, (some that will be devoted to removals, then some for large, very specific, pruning jobs, and then some for small pruning and shearing jobs, even down to one man jobs for stump grinding and fixups and such). I’ve seen it happen where, even though it is meant to be an incentive, there will always be crews who work harder on underbid jobs for pruning who are trying to meet their deadlines for the projected time on the job, and then you get removals, where one can just drop the tree and get the job done in half the amount of time bid for the job. Like Jem4417 said:the talent gets spread out. And the employees start to become disgruntled because one crew is working half as hard as the other and the other crew is “losing money” but working twice as hard and not being recognized for their hard work. Theoretically it’s a nice idea, but when it’s played out with 3+ crews it starts to ruin people. The stress of making the money in time for a bad bid gets to the best of the leaders and ruins them as people. I’ve seen it happen to at least five crew leaders within a timespan of 1 1/2 years only. It’s bad, and it makes others not want to take on the responsibility of being a crew leader for fear of the pressure associated with it

That can all be avoided with a good salesman. If your having 5 crew leaders leave or get upset in a year and a half span...your problem is not the bonus structure. It sounds like your sales department is setting unrealistic expectations or not fully understudying what is involved with the job. I see that happen a lot with larger companies. You have several salesmen and one or two of them are not actually field trained and they have unrealistic time frames and expectations.

Can’t argue with this

 

[Pacafist]

That can all be avoided with a good salesman. If your having 5 crew leaders leave or get upset in a year and a half span...your problem is not the bonus structure. It sounds like your sales department is setting unrealistic expectations or not fully understudying what is involved with the job. I see that happen a lot with larger companies. You have several salesmen and one or two of them are not actually field trained and they have unrealistic time frames and expectations.

Oh I absolutely agree with that aspect. The trick is being able to get a good bid from your rep and/or salesman consistently. There will always be an occasional really good bid and really bad bid, but when your reps aren’t doing their job well, it screws all of the field workers over; and with the bonus program being geared towards the field workers, the rep isn’t necessarily getting as much of a loss as the field workers would be, so where is their motivation besides the commission they may get off of the job? My point being that they have much less to lose than the field workers, and in being so, they aren’t as likely to keep the bonus program in mind.
I am, of course, assuming that your program does not apply to the salesman.
That being said, if you have a good salesman who knows the field work and the time and effort needed on a job, and 90% of the time their bid is accurate, then that’s amazing, and (from what I gather) it sounds like you have a smaller company where you can have that one or two really good salesmen, just watch it as you grow though, as a warning, that when you start to need multiple salesman, they may start to screw your fieldworkers over. Be careful is all I’m saying.

 

[Baja Mike]

Great thread. Thanks for posting guys. I am always looking for what motivates people and have still not found exactly what it is. If money were always a motivator all my guys would have their CDLs as well as be certified arborists. That just isn’t the case. I was thinking something along the lines of a flex schedule except in the spring of course and give the guys the thing that is most valuable to me TIME.