If you’re running a wildly successful and profitable business, don’t hide it.
Profit sharing will benefit you!
Lots of business owners are nervous to let their employees know how much money they’re making. Problem is, those leaders drive to work in expensive cars and take first class flights – their employees already know they’re making lots of money. There is no need to hide it.
The Value in Honesty
Profit sharing is a way to show your employees that you value honesty. There is a stigma around profit sharing, as if it should be some big, secret thing, but if handled correctly, it helps to build relationships between your employees and the company.
Knowing big, important information, such as company profits, makes your employees feel as if they’re in on something that they’d only get if their employee truly trusted them. It makes them feel like a part of something and makes them trust you as their leader more if they know you’ll be honest, even about the big stuff.
“Being open and honest is always in everyone’s best interest. Openness creates a sense of loyalty and makes your business stand out as one that employees want to work at. They feel like they can turn to you for support and you, in turn, can rely on them for guidance – it’s a win-win!” – Cameron Herold
The Best Way to Share
Profit sharing benefits you, but only when done correctly. Sharing a percentage of the company’s profits with employees is great, but employees have to earn it. They have to treat profits the same way their leaders do, otherwise sharing this information might be a waste.
So how do you do this?
Every month, get all your employees to meet and review your company’s income statement together. As a team, look for ways to make more money and save more money on the business. Show them the work behind the numbers, the ins and outs of money where that money goes. You want them to understand the profits rather than just see a big number and moving on.
When they understand, they can help you with ideas!
The Benefit for the Leader
When your employees are under the impression that you, as a leader, are just making all of the money the company makes, they grow to resent you. Profit-sharing helps them to understand where all those profits actually go, which helps them respect you more.
The company’s profit is often used back on the company, especially when you’re just starting out. Employees need to see that. They need to not just know your revenues, but also know your expenses. Help them to understand what percentage of profits go to them and watch them grow inspired to work harder to make those profits grow.
Not many people truly understand where the company’s money really goes. It’s easy to not bother explaining it to them when it’s not an aspect of the job they’re usually a part of, but profit-sharing has its benefits. Show your employees how much of the company’s profits you don’t like and show them that you trust them well enough to share this information and watch their work ethic and respect for you grow.
Do you share your profits with anyone else in your company? Let us know in the comments below!
If you have questions or would like more information, I’d be happy to help. Please send an email, and my team will get in touch with you!
Editor’s Note: This post was originally published in March 2015 and has been edited for accuracy and comprehensiveness.