Creating a profit share scheme for your team helps to:
- Attract the best talent
- Retain them for the long term
- Align everyone’s incentives.
- Drive better performance in your company
Our goal is a win-win: to reward your employees for their hard work in a fair and equitable way by letting them share in the improved performance of the company.
But it’s really important to really think about the design of this before you get started.
When you bring your team on this journey – the goalposts can’t keep changing on them.
Changing the rules halfway through will destroy trust and have a terrible impact on your team.
If your metrics for success are too complex or keep changing this will also erode confidence in your program.
So we want to get this right from the start.
Here are some key questions to consider when building out your own program:
- Is this for key employees or the entire team?
This will affect the size of the funds to distribute.
Some just go with Key Management team; Account managers, ops managers etc
Others go company-wide: get buy-in from all team members.
2. How much financial information are you willing to share?
The purpose of this is to get buy-in from your team and show them how their efforts actually drive the company’s results.
3. Do you micromanage your team?
Or are you willing to train them in best practices, create a process and let them get on with it?
The purpose of this is to inspire a culture of continuous improvement and let the staff have an impact.
4. When do you pay this to staff?
Annually is the standard timeline but often done
Monthly for sales teams who have a larger chunk of their pay from commissions.
5. How will it work in reality?
The more complex the system the harder it is to track and share the progress.
It needs to be simple enough that people trust the results.
Here are some common examples for you to build your own program:
Long-term Incentive Plan (LTIP) for Key Management: