The Semco Style 5 Principles to transform the way we work
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Profit Sharing

Share your power.

Profits must be judged as moral or immoral by how they are earned and how they are disposed. Without a new barometer, we are left with the old barometer—profit for its own sake, regardless of whether it is sustainable or ultimately ruinous – Ricardo Semler


IN A NUTSHELL

Basic economics suggest that employees respond to financial incentives. However, not all financial incentives are created the same. Usually doled out on the basis of merit or hierarchy, incentives like bonuses or commissions can be deceptive in the ways they reward. Profit sharing, for all, when done right has the ability to  empower all employees as it recognizes everyone’s contribution towards the company’s success – whether they’re an entry-level analyst or a C-suite executive.

Known as stakeholder capitalism, this trend recognizes that there are stakeholders beyond the shareholders. Employees are a big component of these stakeholder groups. In France, profit sharing is mandatory in companies which have employed 50 employees for 6 months. In the US, companies can be known as B-corporations, which are defined as for-profit companies, that are required to take into account the interests of shareholders and other stakeholders – like workers, the community and the environment.

Through profit sharing, companies can also start engaging employees in meaningful conversations about the company finances. Companies should not shy away from implementing profit sharing from fear that every year may not be profitable. Rather, they should start profit sharing in a phased manner so as to manage expectations.

 

 

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