I was tasked with developing a profit-sharing plan to implement in 2022. I was told to start with Executive and operations levels first, and if successful, we will roll the program out to our site-level managers. It is a little difficult to be subjective in my framework for the policy, considering I am on the top level, but I'll try. 

Does anyone else have profit-sharing at their company? If so, would you mind revealing how you r company is setup (basics, no details needed).

We do. You have basic metrics that are set to pay out 100% of a bonus. How the company does based on those metrics determine if the Bonus is paid out more than 100% or less than 100%. Then each individuals have their own goals and metrics they have to meet to determine if they get 100% of what the company is paying out or more or less. Bonus percentages are based off of position in the company. Highest positions will be 30 % of salary, next level is 25, then 20, then 15... so on and so forth, 

So company did really well and exceeded metrics by 30% and will pay out 130%. Employee A did well and met their goals and their position is 10% bonus of salary.. so they now get 10% of 130% of their salary.  Employee B did ok and met most goals but not all, so they get 90% of the 130% of their salary.  Assuming they were also at 10% bonus rate. 

So say both make $100k a year... Employee A got a $13k bonus and employee B got $11,700.

What Kizer said seems like a pretty good system, though that appears to be a hybrid performance/profit share.

A singular number/goal isn't good.  And sales people often bitch when they lose money because production didn't hit the targeted operating margin.

Is a graduated or absolute pro rata like Kizer mentioned better than a simple two tier plan?  Don't know, you'd have to research and think about it.  But I would say the simplest "effective" plan is 1 number on revenues and 1 number on margin, and maybe a kicker on both for reaching the higher goal.

posted by gut

What Kizer said seems like a pretty good system, though that appears to be a hybrid performance/profit share.

A singular number/goal isn't good.  And sales people often bitch when they lose money because production didn't hit the targeted operating margin.

Is a graduated or absolute pro rata like Kizer mentioned better than a simple two tier plan?  Don't know, you'd have to research and think about it.  But I would say the simplest "effective" plan is 1 number on revenues and 1 number on margin, and maybe a kicker on both for reaching the higher goal.

The performance review process can hash out the issues of whether you didn't meet your goal was your doing or beyond your control like production not hitting their target. You can be graded as you met your goal by your superior. 

We are not planning on implementing a performance-based aspect of the share. We currently have a performance bonus program in place. Currently, only site-level managers get a performance bonus. For this reason, they would receive a smaller portion of the profit share. This splitting of the share will be the difficult part. I currently work for a corporation that is a holding company for three smaller LLCs. Each LLC has its own sites and directors, but certain positions (HR, Safety, Controller, etc) handle the function for all 4 companies. This will cause me to create a profit-share plan that awards certain employees bonuses off total profits, and some for only one LLC. I've got a shit ton of work ahead of me. Good thing I don't have some bullshit vaccine mandate created by the Fed to take up any of my already precious time. 

Man, I was hoping this great news had to do with America winding up with the most subs somehow. Maybe next time!

posted by brutus161

We are not planning on implementing a performance-based aspect of the share. We currently have a performance bonus program in place. Currently, only site-level managers get a performance bonus. For this reason, they would receive a smaller portion of the profit share. This splitting of the share will be the difficult part. I currently work for a corporation that is a holding company for three smaller LLCs. Each LLC has its own sites and directors, but certain positions (HR, Safety, Controller, etc) handle the function for all 4 companies. This will cause me to create a profit-share plan that awards certain employees bonuses off total profits, and some for only one LLC. I've got a shit ton of work ahead of me. Good thing I don't have some bullshit vaccine mandate created by the Fed to take up any of my already precious time. 

Oh. Sounds like Communism. 

posted by kizer permanente

Oh. Sounds like Communism. 

Did you miss the second fucking sentence? This program will be in addition to the performance bonus program. I like how you call a business owner wanting to share his/her profits with those that are major players in the game Communism. 

posted by brutus161

Did you miss the second fucking sentence? This program will be in addition to the performance bonus program. I like how you call a business owner wanting to share his/her profits with those that are major players in the game Communism. 

lol settle down. It was a joke. You need some weed or something. 

In all seriousness though.... you mention only site level managers are in the performance based program. It would behoove the company to make all associates have some skin in the game for profit sharing. Not all are going to put the same effort and shouldn't all be compensated the same.  Just my opinion.