I have heard that nobody will treat your business the same as you do, unless they have skin in the game.Canadian Contractor
"A great company culture, non-monetary perks, etc., can sometimes go farther than a few extra bucks," says Desmond Sweeney, Macanta Design Build, Winnipeg, who is not a huge fan of profit-sharing.
Desmond Sweeney, Macanta Design Build Inc., Winnipeg, attended our RenoFocus conference in early December.
One of the things we discussed at the roundtable sessions was Profit Sharing: Should You or Shouldn’t You?
Desmond was kind enough to put his thoughts in writing…
“I was one of the contractors who participated in this discussion. The free time provided at the RenoFocus conference was exciting indeed — being able to throw ideas around with, and get feedback from, other business owners proved invaluable. I left with a head full of new ideas.
Regarding profit sharing: In the past I’ve worked for companies that have had profit sharing. There were good years with bonuses, and bad years with none. These good and bad years occurred regardless of how much effort I put forth. Some years I felt under-rewarded. Additionally, bonuses were based on company performance; average workers received the same as exceptional working workers. I don’t think I’ll ever implement profit sharing in my company, at least not in this traditional way.
I’ve also worked for companies where performance-based bonuses were used. I liked this better as I felt I had more control, however depending on the size of the bonus, for smaller companies such as mine this can be difficult on cash-flow. Even if the company has a bad year, superstars exceeding performance expectations get rewarded. They key to this is to define attainable (but not easy) performance expectations for each staff member, and of course to plan to have a few extra dollars earmarked for this to bridge the bad years.
I have heard that nobody will treat your business the same as you do, unless they have skin in the game. For a long time I thought this meant that, short of giving up partial company ownership to an employee (and thus sharing both extra money AND costs), I’d never find someone to fully depend on. But I’ve learned that qualitative rewards — great company culture, non-monetary perks, etc. — can sometimes go farther than a few extra bucks. This is where my company’s current focus is. And in the construction industry, this can also extend to sub-trades.
Macanta Design Build Inc., Winnipeg