Over the years at Jeffrey Scott Consulting, we have helped hundreds of landscape firms set up incentive programs. Profit sharing systems are some of the most complex to set up, but also some of the most effective. Interestingly, not all company cultures “accept” profit sharing. But is it the company culture really? Or how it is implemented?
This topic came up during one of our recent Leader’s Edge peer groups that I led in Washington D.C.
Two members raised the issue that their profit sharing program was missing the mark.
So, we dove in deep.
The symptoms that our two peer group members raised were:
- The employees grumbled about the plans they had.
- Their companies had decent results, but they knew they could do better.
- The owner felt something was missing.
Should you fix or replace your profit sharing program?
We talked about replacing their programs with other incentives, but my advice was to first try to repair their plans. Some of these repair strategies we discussed.
Three common challenges with profit sharing:
- Inconsistency: The monthly results are not shared consistently. They are not explained, left to the imagination of many employees.
- Vague connections: The crews are not clear on what they need to do to drive company-wide performance. They need to be shown the connection between their individual results and the group results.
- Lack of control: The employees don’t feel that their individual efforts really matter or are acknowledged, and the company culture is not enough to overcome this feeling.
Consistency is key, but it’s not enough.
These last two challenges can be solved by taking more time to share and discuss results and also by weighting the profit share payouts.
Example 1 – Whispering Pines Landscape, Ontario, Canada
I am proud to have coached and continue to work with the owner, Greg Wildeboer.
We set up his original profit sharing program and he continues to refine it.
He weights the payouts by department performance, including snow, so that the mini teams are empowered to pull together and be accountable to each other.
It’s a nice balance between department and company-wide results.
Example 2 – Puryear Farms, Nashville, Tenn.
The founder, John Puryear, and I have also worked together for years — helping him turn around his business and do exceedingly well (podcast of his story is here).
He took a different direction, setting up a system that allows individual performance to drive one’s profit sharing earn out.
He has also proven that a Hispanic culture can embrace profit sharing.
Lack of accountability
Even if you fix the issues raised above, lack of accountability can still submarine your profit sharing. If the employees feel that the company allows slackers to hang around and bring down the results, then the employees won’t buy into the program.
Your challenge: don’t let incentive programs backfire!
Incentive systems that don’t work could actually be disincentivizing your team; you need to fix them ASAP.
But try to fix your program before changing it out completely.
Otherwise it could be seen as “yet another change” in your company, which could also be viewed as overpromising and underdelivering.
Like I said, consistency is key.
P.S. Want to join one of our high-performance peer groups and rub shoulders with smart entrepreneurs like the ones mentioned? Apply here.
