Money isn’t the only way to motivate your team, but profit sharing can boost morale, productivity, and help attract and keep good production employees.
Profit sharing can be engineered into the budget so there will be funds to distribute. As long as you hit the gross-profit margin, you can set up profit sharing, says Shawn McCadden. But you have to be careful and systematic in creating the system.
In this episode, Shawn discusses profit-sharing strategies with Tim and Steve, and how to create and maintain a profit-sharing program that will motivate your field team.
Shawn is president of Remodel My Business Inc. in Brookline, NH, and is a prominent figure in the remodeling industry. He obtained his builder’s license by age 18; founded, operated, and sold a successful employee-managed design/build firm; co-founded the Residential Design/Build Institute; and went on to become director of education for a national bath and kitchen remodeling franchise company. Today he speaks frequently at industry conferences and trade events. As an award-winning columnist, he contributes to industry publications, blogs, and writes a monthly column for Qualified Remodeler magazine. You can learn more at www.shawnmccadden.com.
You must have a sensible financial system already in place to make profit sharing work, says Shawn. There’s no room for guesswork. You also need a way to measure what’s happening on a job in the same way it was estimated for apples-to-apples comparisons. He discusses how to implement a profit sharing plan and the benefits, including:
- Starting with best practices
- The difference between profit sharing and bonuses
- Considering profit sharing as an overhead expense
- Training your staff to understand your budget
- Testing it before you roll it out
- Setting the goals
- When — and how often — to distribute the money
- Documenting your process
- Determining who gets how much
- Being a competitive employer in your market
- And more …
The labor shortage is only going to get worse, says Shawn, and a profit-sharing program — along with competitive pay, benefits, and time off — will help your company attract and keep the best employees.
You’ve Got Questions, We’ll Find Answers
This topic was suggested by one of our listeners who wanted to know how to begin a profit-sharing program. If you’ve got a question or idea for a topic or guest, send Tim an email at firstname.lastname@example.org.
New Dates for Extreme Business Makeover
Due to schedule conflicts we moved the Extreme Business Makeover to March 30 – 31, 2020. We’re still at the BWI Westin in Baltimore and we’ve added Bruce Case as a featured speaker… More content being added and we’ve got 4-5 great tools that you will be leaving with, so take a look at this event and we would love to see you there!
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