In recent weeks, I had the privilege of speaking at the 2023 Equip Exposition. The trade show was bustling with new technology, and my two talks were standing-room-only.
The most interactive talk centered on the topic of open book management.
To add a dash of intrigue to my presentation, I showcased a case study from Whispering Pines Landscaping (WPL) in Amaranth, Ontario, Canada. My dear friend, Greg Wildeboer, owns this thriving landscape company.
(Note: Wildeboer is a long-time member of our Leader’s Edge Peer Group, where numerous companies embark on a similar transformative journey. Reach out to me to see if this group is the right fit for you.)
When Greg and I first embarked on our collaborative journey back in December 2015, WPL was operating at under $4 million in revenue, facing some cash flow challenges and grappling with Greg’s need to step back from the center of every decision.
One of Greg’s dreams was to implement a more effective profit-sharing program. While the company had an existing profit-sharing arrangement in place, it was far from ideal.
Our journey towards a more effective profit-sharing model at WPL serves as an inspiring case study.
A profit-sharing case study
For profit sharing to be truly effective, it requires two essential elements:
- Gains: A fair and motivating method to distribute the financial gains.
- Numbers: A straightforward approach to transparently share the company’s financial data.
At WPL, it took a few years of a concerted effort to establish these fundamental elements correctly.
- 2017: 4.9 percent profit
- 2018: 5.4 percent profit
- 2019: 7.75 percent profit
- 2020: 11.3 percent profit
- 2021: 14.3 percent profit
- 2022: 16.2 percent profit
- 2023 (Forecast): 16.5 percent profit — a remarkable achievement, particularly in the face of the current economic challenges.
In Greg’s own words, “It took a few years to gain traction. One of the challenges was parting ways with employees who weren’t aligned with the company’s new direction and were resistant to the cultural shift.”
He continued, “On a positive note, even in the face of an economic softening in 2023, we are holding strong and continually seeking ways to enhance efficiency and the overall client experience.”
Five key factors for profit sharing success
Throughout our journey at WPL, we utilized several invaluable tools:
- Consistency: Greg initiated his monthly financial update meetings in May 2016 and has steadfastly delivered monthly and year-to-date metrics for over seven years.
- Focus on key numbers: Greg provides a clear snapshot of the company’s financial health by comparing budgeted versus actual sales, expenses and net profit.
- Divisional categories: The company segregates key performance indicators (KPIs) into four divisions: snow removal, landscape construction, grounds maintenance and gardening services.
- Monthly updates: Each month, the team reviews divisional budgets and year-over-year results while also sharing a five-year trend.
- Reachable goals: WPL sets a conservative budget, making it likely to achieve the minimum goals required for profit sharing. The pursuit of achievable goals fosters a “habit of winning.”
What’s in it for the employee?
The company shares how the profit pool has grown (or not) each month. As of September 2023, the pool’s value is more than $150,000, and WPL anticipates a profit share of more than $200,000 by year’s end.
Your challenge is how to foster a company-wide ownership mentality.
As the saying goes, “What gets measured gets managed.” Greg takes it a step further with, “What gets shared gets owned.”
Implementing a successful profit-sharing program requires a measured approach. Rushing into it with a “fire first and aim later” attitude will surely backfire.
Start slowly, seek assistance and do things right. Greg and I worked on his program together for several years and now it has taken on a life of its own, greatly benefitting the company.
Even those with conservative inclinations can achieve remarkable success. Greg, a conservative entrepreneur, has steadily grown his company from just under $4 million to almost $10 million this year. He has also built a strong leadership team to navigate the path to $20 million and beyond.
In the end, it’s about hard work, the right experts and a supportive peer group. With these elements in place, you, too, can realize your dreams.
