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Small Business Resources
I have in place a profit share program for my employees. I really thought this would help motivate them and make them feel appreciative of the place they work. I have been disappointed that performance has not really stepped up. In addition, when we had a drop in profits, they complained about their bonuses. Any thoughts?There are a number of considerations potentially at play here. They can range from the way expectations are communicated, to recruitment practices, to management techniques. But restricting the discussion to the profit share, I will make the following observation. Profit sharing can be a very generous act. With a team that is highly motivated and that can see the direct connection between their actions and their bank accounts it can be very useful. The problem exists, though, when that connection is less obvious. If members of the team feel that they have no impact on profitability, there is little motivation. Sometimes if people feel they can get a profit share simply as a result of the efforts of others, they may be willing to ride on those efforts. Ideally, your compensation programs, particularly your bonus practices, will be aligned with desired behaviour. You can share profits, but only to the extent that your team members have met your expectations. Having said that, it is incumbent upon you to make those expectations clear. This should be done with clear criteria for each position that are called Key Performance Indicators. When your team is clear on the expectations, when they can see that their bonusing is connected to clearly articulated behaviour and outcomes and when they know they are, in fact, being evaluated, you should see an improvement in their performance.
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