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  • #998777
    Jazzah
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    Hi, We are starting a new business and would Ike to include profit sharing, whereby staff receive a set % of profit on a quarterly basis, this is based upon the hours they worked, not their role or salary or sales/leads. It;s fairly non-glamorous day to day work.

    A large proportion of staff will be casual and their pay rates under the award are not so good, so we thought this recognises how valuable they are to us achieving our profits. It is also something that clients now consider, how much of what they pay in terms of fees is actually going directly pay staff, which is where their loyalty starts.

    I would like to hear people’s stories if they have tried this. Where did they seek advice? What were the pros and cons?

    Thanks for sharing in advance.

    Jazzah

    #1216032
    Paul – FS Concierge
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    Hi Jazzah,

    I have some experience around the edges of this concept in a broader management context.

    What I wanted to achieve was to motivate staff o do their best on a long term basis.

    To do that, I thought up some incentive programs that I introduced for short periods only eg, 1 to 2 months.

    Then they would end and I would think up another.

    Some people are strongly motivated by money, others are not. So I would include choice for the beneficiary eg, some chose a luxury item or time off instead of $$$. Child care could be another category people would be motivated by.

    My observation is that if something is introduced permanently, it becomes part of what people expect and people are not motivated day, do day, to achieve more if they already expect to get what you are offering.

    On the other hand, profit sharing is very motivating for prospective employees to join a company.

    #1216033
    bb1
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    What a great idea, the only caution is to make sure that you leave yourself enough of the profit, but especially in a low paid industry it is great to see someone wanting to motivate the employee’s

    Paul – FS Concierge, post: 260411, member: 78928 wrote:

    Paul – FS Concierge, post: 260411, member: 78928 wrote:
    Paul – FS Concierge, post: 260411, member: 78928 wrote:
    Paul – FS Concierge, post: 260411, member: 78928 wrote:
    To do that, I thought up some incentive programs that I introduced for short periods only eg, 1 to 2 months.

    Then they would end and I would think up another.

    I have seen this approach used and it has always being a failure, the employee’s just see it as the boss throwing them a crumb when his profits are down so lets try to work them a little harder, or I woke up this morning and had a thought bubble. It almost becomes a bullying tactic from what I have seen.

    Paul – FS Concierge, post: 260411, member: 78928 wrote:
    My observation is that if something is introduced permanently, it becomes part of what people expect and people are not motivated day, do day, to achieve more if they already expect to get what you are offering.

    If it’s introduced correctly it will be a day to day motivator, as the higher the profit the more incentive (be it cash or kind), it is much more a friendly management approach then the oh lets wait and see if I’m in a good mood next month, which the first approach of throwing the bread crumb becomes.

    #1216034
    Jazzah
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    Thanks for your feedback,

    I would prefer that this is a regular approach rather than a reward program that changes, I want our staff to be interested in how well we do, that they are central to our success and know they receive a part of that.

    I agree I need to be careful about the amount I allocate to this and have an accountant looking at what that should be.

    As this market continues to be deregulated customers question how much staff are paid, they know how much per hour they pay for the service but their understanding of what the gap covers is not there. They will move their staff to higher paying organisations if that means their staff are paid better. So we would like some transparency of how we pay staff and also provide a profit share.

    This market is not one where there is a massive profit margin, but our lower overheads compared to large not-for-profits give us this small capacity as we don’t benefit from salary packaging concessions either. I amok with staff expecting this, if we all put in the effort they should!

    Happy for more feedback!

    Cheers
    Junelle

    #1216035
    Paul – FS Concierge
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    bb1, post: 260414, member: 53375 wrote:
    What a great idea, the only caution is to make sure that you leave yourself enough of the profit, but especially in a low paid industry it is great to see someone wanting to motivate the employee’s

    I have seen this approach used and it has always being a failure, the employee’s just see it as the boss throwing them a crumb when his profits are down so lets try to work them a little harder, or I woke up this morning and had a thought bubble. It almost becomes a bullying tactic from what I have seen.

    If it’s introduced correctly it will be a day to day motivator, as the higher the profit the more incentive (be it cash or kind), it is much more a friendly management approach then the oh lets wait and see if I’m in a good mood next month, which the first approach of throwing the bread crumb becomes.

    I based my approach and the feedback I have given here on a a lot of research – best practice if you will.

    It was only yesterday, I was speaking to a former staff member of mine that said that was the best place she ever worked – she is 62 years old so she has some experience.

    And I have heard this same comment from other people that worked with me probably 25 or more times.

    This is within the context of a super high performing team – the various programs allowed for different and regular ways to explicitly acknowledge their contributions.

    Fun, excellence, acknowledgement, recognition, creativity were all drivers of the program.

    I did a ton of other stuff as well to keep stimulating the staff – things like wellness programs, personal development and professional development initiatives – much of it was led by the team.

    And it was within an NGO.

    The point being, that we are not all motivated by the same thing and having a “new normal” – increased baseline is not motivating in the long term.

    #1216036
    James Millar
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    Kudos to you Jazzah for bucking the trend and trying to offer more to your staff. Its not always easy, especially if you operate in a low margin space.

    Not surprisingly businesses which have HR requirements that are not necessary career orientated (filler jobs etc) have a much harder time finding and retaining good people. I also fear many youngsters see casual work or non career work as a stepping stone that does not warrant the same commitment.

    Other than the suggestions above there is probably no magic bullet. I definitely agree with Paul in that money is not necessarily the key for everyone. This really hit home when I listened to some of the outbound Tesla staff interviews last week. Despite being retrenched and facing adverse personal outcomes, the staff still praised the company, its culture and leader in Elon Musk. It seems the people that work at Tesla do so for reasons vastly more important to them than money. As an employer, if people speak well of you after you fire them you must be doing something right.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1216037
    Dave Gillen – Former FS Concierge
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    Hi [USER=16513]@Jazzah[/USER],

    Does the solution match the problem?
    If you had said – “My workers are poorly paid, I’d like to pay them more.” Then great. But you’ve mentioned something about unglamorous work, so I’m wondering if there’s a more direct way to address the problem?

    A few extra dollars may help someone stomach the work, but it may not make them any happier or make you a leader in your market.

    Dave

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