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Tips for introducing profit sharing as a reward
Define profit sharing-there are misconceptions about profit sharing so you will need to carefully explain what profit sharing is.One of the most common misconceptions about profit sharing is that profit sharing and stock options are the same thing.Explain to your employee that profit sharing is a payment made every year (or every quarter-what ever works for your company) and that a proportion of the company's profits will be divided up among all employees.They should understand the difference between profit sharing and bonuses.For example, profit sharing is not based on merit.The only thing that you need to do to receive your share of the goods is maintain employment.When you make the presentation, give plenty of examples.Show what a million dollar year looks like, what percentage of that profit will be shared with employees and what each employee could expect to receive.Then do the same thing for a one hundred thousand dollar year.
Use profit sharing to promote teamwork-when you are presenting profit sharing to your employees emphasize that the better the company as a whole does, the better each individual does.You want to use profit sharing, not just as a benefit but also as a teambuilding tool.Really help people to understand the team concept and that every employee benefits when the company does well.You might also point out the inverse, that when the company does poorly, every member of the team loses out.One of the best things that can come out of offering profit sharing is teambuilding. Implement some sort of a visual aid-one problem with profit sharing is that when it is first introduced people "get it" and are all about teamwork and striving to help the company to succeed.It doesn't take long for everybody to forget about the teamwork aspect and just start to expect a big fat bonus from time to time.To help employees to see profit sharing as a reward for hard work rather than an entitlement, build some sort of a visual aid.Several times a year, or whenever possible have your accounting department estimate the year-to-date profits.You can have a big thermometer or some other visual aid that rises and falls as the company's profits rise and fall. Put the visual aid some place where everyone will see it.Common areas like cafeterias work well for this.You can teach people a formula to estimate their stake in the profits.This should help keep people motivated and psyched for profit sharing. |
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