Employee Profit-Sharing: A double edge sword?
RenoFocus attendees addressed the challenges of motivating their teams
December 3, 2015 by John Bleasby
An unexpected highlight of Canadian Contractor’s RenoFocus earlier this week was the opportunity for contractors from across Canada to meet in a casual atmosphere between scheduled information sessions to openly discuss an incredible number of mutually shared issues and concerns. It was billed as ‘Free Time’, but it was the free-flow of ideas that excited everyone at the table.
Discussion point: How to motivate and reward staff?
Retaining a consistent team of skilled workers is one of the most important on-going challenges for any successful contractor. It takes time to integrate a new team member to your systems both in the field and in the office. The benefits of retaining motivated employees who are rewarded for initiative can be an enormous contributor to the bottom line. These key issues were freely discussed around the table by contractors from the East Coast, across Ontario, and the West.
Thinking beyond the pay cheque
Many hourly workers focus on their take-home pay with little concern for their future or their role in the overall company effort. Employee benefits such as optional retirement savings plans and health/disability coverages are available from a number of carriers in Canada for the smallest of companies. Matching contributions give workers with family responsibilities some assurance of financial stability, and demonstrate the employers’ concern for their well-being. This can keep them on your team rather than drifting off either independently or to another company.
What about profit sharing?
Does it work? Is it fair to everyone? Should it apply to every employee? Does it open the company owner (and the books) to unnecessary scrutiny that can backfire? This is the challenge of any profit-sharing plan.
“Nice new BMW 7-Series in the parking lot, boss!”
Many around the table favoured all-encompassing company/family events like summer BBQ’s, and fishing trips. Others liked the idea of seasonal or occasional bonus cheques, maybe with a turkey or a bottle thrown in for good measure.
Plan concepts must be realistic in practice
One contractor described a profit-sharing plan (not his) based on a job-to-job efficiency measure. Criteria of about 40 points on each project had to be met, including time to completion and quality. If the objectives were met, that team would receive a bonus for their effort. The problem is: What happens if the job doesn’t meet all the criteria? Who’s at fault? Is there a claw-back on jobs that don’t meet the criteria? While good in concept, this system seemed filled with complications and potential headaches.
Nevertheless, everyone felt that profit-sharing, or at least profit-recognition, could be an important tool. The best plans would be those that foster joint responsibility across the entire company, for example between on-site teams, or between workers in the field and support staff in the office. Systems should develop a shared responsibility, a desire to offer help to teams with projects running behind schedule from those with labour to spare. These were the systems the discussion group felt were most effective, and that avoided opening the company books to any awkward critiques of corporate spending or investment.
Profit-sharing: Love it or leave it?
Is profit-sharing a tool you use in your business to motivate and retain your best people?
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