3. I’m not sure how the accounting would work, but if we kept the salary the same and tied it to a quarterly bonus structure based on company profits, it could

3. I’m not sure how the accounting would work, but if we kept the salary the same and tied it to a quarterly bonus structure based on company profits, it could create a more direct link between short-term productivity and income. (That’s not really a fundamental change though… more like a nudge.) Don't do this. This is the first step towards stack ranking and your 2nd-best developer walking out the door. Followed by the new 2nd-best after that. I've never seen it tried but I think profit sharing should be allocated along salary share lines. So if you pay 20 employees an equal salary they should all get an equal share of the dividend. If an employee is actually paid, say, 7% of the total salary pot then they should get 7% of the dividend and everyone else would get their %-age share correlating with their %-age of the salary share. If any rock stars feel they're owed "their fare share" since they did more contributing, then they should negotiate a mutually agreeable salary or find another employer who values them more in line with their expectations. I'm aware that successful pro athletes expect individual performance bonuses. As do successful Large Company" employees. Whether this is just survivorship bias in action or not, I'm not qualified to say.