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Profit Sharing Experience

Seeker

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Dec 21, 2015
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Yesterday my employer released the amount of Bonus or Profit Share every employee will receive this year. It was pretty interesting to watch the reactions of my colleagues as well as my own. Because of the social media style comments section in the intranet you get a pretty good feeling, what people think about it.

Almost every external colleague (subcontractors, consultants and temporary workers) was offended or envious because they don't receive the profit share, although they contributed in the same way as all regular employees. For them not getting paid was a lack of appreciation. And almost every colleague who got the share was disappointed. Why? Because despite the most successful year in the companies history the share was comparingly low. It was around one monthly payment (roughly 5.5K gross) for the avg. employee.

The worldwide profit of last year exceeded 2 Billion Euro for the first time. This was generated through 12,000 people all over the world and a few thousand externals. This means on average every employee contributed 166,666 Euro to the profit. This is the net number after all wages are paid, all taxes and investments are deducted. If you consider this number the (way above average in the industry) profit share of 5.5k doesn't look like a lot. In other words a little over 3% is shared. So although everybody is getting more than industry standard almost everyone is disappointed because they expected even more. In the end only a few are thankful, basically everybody is unhappy. This really makes me think if it wouldn't be better to be the employer instead of an employee.

Now my questions are:
1. Wouldn't that mean that I'd exploit my employees as well? Or is it even exploiting?
2. Do you think this is fair / ethical to keep 161k and pay 5.5k? Or is everything paid with the wages and an employee shouldn't claim anymore than agreed on?
3. If you have employees do you share the profit and if so how much?

Let me know what you think...
 

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Lord Business

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"I was on an airplane and there was high-speed Internet on the airplane. That's the newest thing that I know exists. And I'm sitting on the plane and they go, open up your laptop, you can go on the Internet. And it's fast, and I'm watching YouTube clips. It's amaz--I'm on an airplane! And then it breaks down. And they apologize, the Internet's not working. And the guy next to me goes, 'This is b___s___.' I mean, how quickly does the world owe him something that he knew existed only 10 seconds ago?" Louis CK

Nothing pisses me off more than people who expect the world (employer, friends, politics, country, healthcare ectect) owns them anything. It disgusts me so much, I go out of my way to keep those kind of people as far away from my life as possible.
 

masterneme

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I think that company hasn't a very well defined culture or philosophy and it would need some restructuring.

The most successful companies have very specific and well known cultures, they hire people in tune with their values so they are happier and self-motivated.

Their reward is the inner sense of collective contribution.

What are the values of the company? Does it have a mission statement or a vision? Do employees know about the short and long term goals (and I'm not talking about the money)?

If there is a specific and defined company culture then there has been some short of miscommunication or someone has been hiring the "wrong" people.

Those are the lessons for me:

-Have a specific vision.
-Be sure to clearly communicate it.
-Hire talented people in tune with the mindset.
-Make being on your company rewarding by itself so money it's and added benefit.
 

ZCP

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We are clear beforehand how much they will get.....
If you do X, you get nothing extra. (As that just keeps the doors open)
If you do X + Y, you get a certain percent share of Y.
Then we keep them updated on where they stand.
Keeps them motivated.

And + 1 on hiring for culture fit.
 

masterneme

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We are clear beforehand how much they will get.....
If you do X, you get nothing extra. (As that just keeps the doors open)
If you do X + Y, you get a certain percent share of Y.
Then we keep them updated on where they stand.
Keeps them motivated.

And + 1 on hiring for culture fit.
Yes I like this, it makes me realize that money CAN be one of the company values, just be upfront with it.
 

steelandchrome

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I think if you structure it in a clear manner to where the people know if they hit certain metrics they will get certain rewards that is the easiest way to hold both parties accountable. My current job we give the hourly employees 1.5% pool of everything from 95-100% of sales plan and then 3% of everything from 100.1%+ that goes into a pool and is split by the team. There is a complex calculation of time in company, PT vs FT, hours worked over the last year, etc. But is still easy to know that just exceed sales plan and you get more money. As a salaried employee it varies for up to 50% bonuses every 6 months and they give us a calculator to punch in results so we know basically what we will get when we hit certain metrics.

As far as how much is given that is entirely up to the company. I have seen people get a 50% of their salary bonus and still not be happy with it as well as people who received a $300 bonus that were all fired up.

What the people don't understand about 3% bonus is that the company didn't pocket the other 97% and say screw you. They had salaries through the year, insurance, liabilities, overhead, inventory, payment processing fees, hiring and firing costs, etc... If they put 30% back to the bank account they are doing pretty well in most industries so 3% could actually be 10% of all the profits they had left over.
 

GoGetter24

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1. Wouldn't that mean that I'd exploit my employees as well? Or is it even exploiting?
Yes, just the same as they exploit your prior successful risk taking for a stable salary.
No doubt your society is burdening you with crabs-in-a-bucket morality. Best to just nod and ignore them.
2. Do you think this is fair / ethical to keep 161k and pay 5.5k? Or is everything paid with the wages and an employee shouldn't claim anymore than agreed on?
First, this company should clearly have never done this 'profit sharing'. They should have stuck to plain bonuses.
Bringing attention to the difference between salary and profit just encourages envy, and shines a light on people that "we're winners, you're losers, because you didn't successfully take risk like we did". It's stupid.
It is unethical to give a payout like that, because it should have been zero. If you divide that 161k by the chance of a company succeeding to reach that level of size and income, it's about right, but the way it was paid out was retarded.
They should fire whichever socialist idiot they put in charge. Pay bonuses for individual performance, not "share profits" over everyone. If the employees want to own a piece or you want them to, give an option to pay out a bit larger bonus than cash in future-vesting stock.
 

RobD88

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I think there is a fine line between employer vs. employee expectations. The employer would tell you they pay you a salary to do your job to the utmost of your ability. If they didn't think you had value to them in reaching their corporate goals you would not be working there in the first place. The fact that they shared any of the profits at all can be seen as being benevolent. That is not wrong depending on your perspective.

The employee will tell you exactly what you said...I brought way more to the bottom line than this measily bonus. I deserve more you greedy so and so. That is also not wrong depending on your perspective.

But then, isn't that why we are all here? We believe in our value than an employer does or would? We believe in putting our fate in our own hands and not that of a corporate master? Our perspective is that we can and will bring more value to the market than we could working for someone else and in return we expect that value returned to us tenfold.

Take the money, put it into your fastlane enterprise and move onward and upward! When you're the one calling the shots you can be as benevolent as you wish.
 

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