How will profit sharing affect me?
I work for a relatively medium sized catering company. The owners want to go to a profit sharing style of pay. I’m confused how this is going to look for my overall pay, and how it works in general actually. I make a $25 an hour wage right now, working 40-50 hours a week. The company will be dropping down to around 9 full time employees (including the two owners, who are very involved in all aspects). I just would like maybe a small example of how it would work or any information you could give me. I want to make the best decision for my family when it comes to new changes such as this.
Thank you so much for taking the time out of your day to answer my question!
It sounds like the owners are going to a variable pay model. That typically means that some of your pay will be based on hours worked or salary, and some of your pay is “pay for performance” that motivates employees to work harder / smarter, with a focus on profitability.
However, how it will work at your firm depends completely on how the owners set it up. Of course, they can’t pay wages below minimum wage, but other than that, you’ll need to get more info from them on how they plan to manage your compensation.
Questions to ask are:
What will my base pay be?
What percent of pay is based on performance (profit sharing)?
What criteria will you use to determine my percentage or $ amount?
Will I be paid each pay period, or receive profit sharing on some other timeframe (such as quarterly/annually)?
Can they provide a few examples?
Once you have these questions answered, you’ll be in a better position to understand the impact of the change on your finances.
Laura, HR Writer, SPHR