Profit Sharing Questions.

[Legacy]

Ahhh so there is a formula. gotcha.

[Ryan Coke2]

I believe.......

A minimum of 10% of the profit, up to a max of 20%, matching the operational margins.

In other words, if margin is 5%, profit share is 10% of profit.
--------------------------15%,--------------15%--------
--------------------------25%---------------20%-------

[Blastor]

The Difference Between Gainsharing & Profit Sharing

Many people who confuse Profit Sharing and Gainsharing view them as being one in the same. Employees have an opportunity to earn a bonus under both approaches, but that is where the similarity ends. There are always exceptions, but the following provides a general outline of the major differences.

Purpose

Gainsharing : To drive performance of an organization by promoting awareness, alignment, teamwork, communication and involvement

Profit Sharing: To share the financial success of the total organization and encourage employee identity with company success.

Application

Gainsharing : The plan commonly applies to a single facility, site, or stand-alone organization

Profit Sharing: The plan typically applies organization-wide; companies with multiple sites typically measure organization-wide profitability rather than the performance of a single site.

Measurement

Gainsharing : Payout is based on operational measures (productivity, quality, spending, service), measures that improve the “line of site” in terms of what employees do and how they are compensated

Profit Sharing: Payout is based on a broad financial measure of the organization’s profitability.

Funding

Gainsharing : Gains and resulting payouts are self-funded based on savings generated by improved performance.

Profit Sharing: Payouts are funded through company profits

Payment Target

Gainsharing : Payouts are made only when performance has improved over a historical standard or target.

Profit Sharing: Payouts are typically made when there are profits; performance doesn’t necessary have to show an improvement.

Employee Eligibility

Gainsharing : Typically all employees at a site are eligible for plan payments.

Profit Sharing: Some employee groups may be excluded, such as hourly or union employees.

Payout Frequency

Gainsharing : Payout is often monthly or quarterly. Many plans have a year-end reserve fund to account for deficit periods.

Profit Sharing: Payout is typically annual.


Form of Payment

Gainsharing : Payment is cash rather than deferred compensation. Many organizations pay via separate check to increase visibility

Profit Sharing: Historically profit plans were primarily deferred compensation plans; organization used profit sharing as a pension plan. Today we see many more cash plans.

Method of Distribution

Gainsharing : Typically employees receive the same % payout or cents per hour bonus.

Profit Sharing: The bonus may be a larger % of compensation for higher-level employees. The % bonus may be less for lower level employees

Plan Design & Development

Gainsharing : Employees often are involved with the design and implementation process

Profit Sharing: There is no employee involvement in the design process.

Communication

Gainsharing : A supporting employee involvement and communication system is an integral element of Gainsharing and helps drive improvement initiatives.

Profit Sharing: Since there is little linkage between “what employees do” and the “bonus,” there is an absence of accompanying employee involvement initiatives.

Pay for Performance Plan versus Entitlement

Gainsharing : Gains are generated only by improved performance over a predetermined base level of performance. Therefore, Gainsharing is viewed as a pay-for-performance initiative.

Profit Sharing: Profit sharing often is viewed as a entitlement or employee benefit

Impact on Behaviors

Gainsharing : Gainsharing reinforces behaviors that promote improved performance. Used as a tool to drive cultural and organization change.

Profit Sharing: Little impact on behaviors since employees have difficulty linking “what they do” and their “bonus.” Many variables outside of the typical employee’s control determine profitability and the bonus amount.

Impact on Attitudes


Gainsharing : Heightens the level of employee awareness, helps develop the feeling of self worth, builds a senses of ownership and identity to the organization.

Profit Sharing: Influences the sense of employee identity to the organization, particularly for smaller organizations




http://www.masternak.com/gainsharing-ve ... agodL1ISJA

[Blastor]

How does Profit sharing work? The company contributes a portion of its pre-tax profits to a pool that will be distributed among eligible employees. The amount distributed to each employee may be weighted by the employee's base salary so that employees with higher base salaries receive a slightly higher amount of the shared pool of profits. Generally this is done on an annual basis.

Advantages

•Brings groups of employees to work together toward a common goal (the success/benefit of the company).

•Helps employees focus on profitability.

•The costs of implementing the plan rise and fall with the company's revenues.

•Enhances commitment to organizational goals.


Disadvantages


The pay for each employee moves up or down together (no individual differences for merit or performance).

Focuses only on the goal of profitability (which may be at the expense of quality).


For smaller companies, these plans may result in drastic swings in earnings for employees which the employees may find difficult to manage their personal finances.


Adherence to the FLSA requires employers to recalculate each worker's "regular rate" of pay. To overcome this limitation, employers may restrict this type of compensation to exempt employees.
•

[Rotten Apple #1]

Blastor-bator, that's a lotta high-falutin' ritt'n mister.

Now, you may or may not glean from my posts that I'm not one to gild the lily.

Well, I'm not.

Ergo,

the 'gross' amounts for 2007 and 2008 profit sharing for jonny dangerous were as follows:

2007: $19107.97
2008: $13201.40

I am not sure where that fits into the info you quoted above. Perhaps you could supply the commentary.

Personally, I am expecting less in 2009 (due to ongoing macro-economic travails), but this company has surprised me before (actually, this morning when I read our November traffic stats) so it could be decent.




Take care,

Jonny (big fan of your work)


p.s. ca va-de-soi que le gouvernement a pris son lot des chiffres au-dessus. Et j'ai tente(') de trouver les resultats pour l'annee(') 2006 mais ce n'etait possible. Malheureusement.

Co-lisse,
Tabernac!!!

'oo 'as my Cinquante?