profit sharing?


Anyone have any thoughts on profit sharing with employees? A sort of added bonus to a foreman who is a top of the line employeee or to new hires as a benefit after they have been there a certain amount of time?

My situation is that I am looking for an added bonus to offer a guy who is a foreman in the winter to come aboard year round as he is looking for:
A: a new job for the just the summer season in a different field
B: or a year round job, with me or someone else.

He has two years experience with me and 5 years experience as a foreman at his other job, where he runs the show. (summer work only)

I have never had any problems with him i.e.: reliability, theft, poor work, dishonesty, etc.

He handles customer relations, schedules work, handles money of those customers that pay on the spot, keeps his own time, preforms repairs and maintenance before it is needed, takes a company truck home and keeps it spit shined and polished, no exaggerations.

I know this does have its downfalls, and some people believe in the open books theory, some don't--but aside from a partner who invests capital in the business, I need to find reliable people. And partnerships don't always workout as I have seen from different businesses throughout my family.

Worst case scenario is he stays for the season and decides he doesn't like the work and goes somewhere else.

What percent of profits? Any thoughts of gross profit percentages over net profit percentages?

It is a big investment, I know but it disgusts me to have to mail out 20 w-2's at the end of the season to fill two positoons.

Basically, I am at the point where I don't mind to pay a little extra to good people, as I don't have the headaches that come with the crap and can concentrate on other aspects of running my business and expanding.

I would also like to pursue other ventures such as finishing my schooling part time among other things and it would also be nice to go away for three days once a year and not be strapped to the cell phone and pager like life support.

Any suggestions/Ideas- I welcome them all because we are all here to learn. Sorry for the long post.

Lawn Lad

Senior Member
A couple of thoughts.

One, you could provide bonuses/pay incentives for specific performance. Much like you mention, you have a great employee that may deserve something extra.

Year 'round employment in our seasonal businesses is a great benefit, and one that sometimes you have to remind your year 'round guys about. They're some of the lucky few to have those positions.

Profit sharing does not require that you open your books to the employees. For that matter, I don't think they need to know what it costs you to run your business. Open scrutiny from those that don't have the proper education/training perspective may not be what you want. The IRS has specific rules for profit sharing that you'll need to talk with your accountant about - and this does not require you to open your books. You simply make a contribution to the plan based on your sales/profit, etc. It carries some costs to adminstrating, but has a lot of benefits for the owner depending on the type of business you run, your profit and your goals.

In the mean time, you might consider something like a Simple IRA that you can make a contribution to. It's 100% vested at the time of your contribution, but it non the less shows your dedciated employee that you're willing to make an investment in him.

Talk with your accountant and see what options are out there. Talk to other accountants for ideas - maybe your accountant can't handle the growth that you're experiencing and my not have the answers.

Good luck... it's tough to keep good employees.
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Mick Veteran
Stephen - Just a couple of thoughts. I'd talk with this guy and see what motivates him. Money isn't always the answer. He might really want to think he's "running the show" but there again, people who say they want to be the boss sometimes don't really want the responsibility of supervision. They might want to work without close supervision, maybe just told what job that needs done and turned loose to get it done. Or maybe he'd like some to give some insights on various aspects of the business or particular jobs. Or just drive around in a nice, shiny truck.

Sometimes you need to listen to what isn't being said - what he says isn't neccessarily what he means. How long has he been in the current arrangement? Why does he want a change? Maybe he wants a couple of weeks/months off at a certain time of year. Maybe a paid vacation or convenient layoff.

Finally, don't forget benefits. My daughter just got through a job search. She finally took a job that paid less because it provided fully paid family health insurance and is a small, family-oriented company. The owner/boss insists she take off for the kids' school functions etc. Even went so far as put her on salary so she could just come and go as she needs for the kids.

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