Profit sharing is a popular tool available for companies in the home service industry, both public and private, large and small. However, simply passing along profit to employees without some objectives in place doesn’t make sense for everyone. Introducing milestones and goals into your profit-sharing program is a best practice that ensures a benefit for the business, as well as the employees.
What kind of milestones should you set?
The first question to answer when considering implementation is about milestone options. For example, your home service milestones might look a bit different than those of a downtown accounting firm. But honestly, although a milestone can be different for every business, there are a few typical flavors.
Financial milestones: With a financial milestone, the value is determined directly from the company’s bottomline. It can be based on net profits, gross revenue or some other financial goal.
Binary milestones: A business can also use profit-sharing as a means to encourage the highest performance from their employees. A binary goal is achievement-based rather than something quantitative. So, a goal might be to complete a user’s manual for an internal system or the company landing a big contract.
Value-based milestones: Many roles have measurable returns that can be easily tied to milestones for profit sharing. For example, a technician could have a goal tied to the number of jobs completed per week or month or a time-per-job average they need to hit. Their profit-sharing percentage depends on how well they achieve goals each year.
The last two models are a bit trickier to implement and document. Choosing a tangible or measurable goal is best where you can. If the milestone falls into the binary bucket, you need to ensure it’s not too complex or impossible to achieve.
These are the basics to get you started, and you still need to decide how to best communicate and execute the plan. If it seems too overwhelming, there are some resources available to help.
Adding milestones to yourstock or profit-sharing program
There are multiple ways to communicate milestones and update employees on their progress. Spreadsheets, regular email updates, tally boards and other manual options are employed by many organizations. But you can find simpler solutions with a fully digital program.
For example, Reins introduces Milestones to their existing platform, offering the ability to manage and communicate in real time. Employers can easily tie any milestoneinto their stock or profit program, and employees can see on their dashboardthe milestones assigned to them, how it affects their share of stock or profitand how they or the company are performing against the goals.
To learn how Reins can help your business set up milestones to incentivize employees for stock or profit sharing, call us at (725) 237-5396 or book a call today.
