5 ms·

The only bonus I have ever received which didn’t make me feel scummy was profit-sharing. Most companies don’t do it because profit is for the owners. Everything

The only bonus I have ever received which didn’t make me feel scummy was profit-sharing. Most companies don’t do it because profit is for the owners. Everything else just feels like a way to decide whether or not to pay me what I’m worth after I’ve already done the work

t_mann 4y ago
How is that different? Somehow we have to measure what your individual contribution to the company's profits was, which, unless you work in sales maybe, is going to involve a lot of judgment.
- jameshart 4y ago
  At Wrox Press during the dotcom era editorial staff were comped with direct sales-derived royalties. Was the most connected I have ever been to a metric that clearly mattered to the business. There were some perverse incentives - people wanted to work on bestsellers, there was jockeying for credit for carryover work from previous editions, but in general it promoted a creative energy around trying to publish hit books, editors had a good deal of direct ownership that could actually impact the product they were shipping, and the scheme even helped align you on the same team as authors, whose compensation is also royalty driven - where for many other publishers author royalties are almost in conflict with what the publisher wants from the deal. Such a direct unit sales driven profit share is hard to imagine engineering into many other businesses but it’s always stood out to me as a remarkably powerful model.
  - t_mann 4y ago
    Yeah, everywhere that's close to sales it's usually possible to attribute revenue shares directly. But even in those organizations a lot of people will be doing work that can't be directly measured (IT, accounting,...), so either you cut those people out of bonuses or you find some metrics to include them.
    - jameshart 4y ago
      Editorial work is not close to sales. It’s upfront product development work. What Wrox did, though, was very clearly assign editors to book projects. You worked on one book at a time - each book was a little startup venture that shipped a product at the end.
      - toast0 4y ago
        Editorial work is close to sales in that it's clear that editorial quality impacts sales and it can be clear who did the editorial work on an item that sold. (Depends on the editorial process though, if you do a lot of group work, maybe it's hard to say who did how much). As opposed to IT work where sure, if the editors computer doesn't work, it's hard for them to do their editing, but there's not much connection to a specific item.
        jameshart 4y ago
        Well, that’s rather my point. Most publishers don’t run editorial work like that, but if you are able to organize your teams around products that have clear revenue streams, even indirect work can be attributed to it. Look at the credit roll on a video game and you’ll see credits for ‘IT support’. The lesson I take from the Wrox experience is that there might be ways for other businesses to pull the same trick and get the same benefits. But I’ve not often seen it attempted.
        t_mann 4y ago
        If you are able to organize your teams around products that have clear revenue streams, even indirect work can be attributed to it That's pretty much what every finance department in every company on earth large enough to have one does (with notable exceptions maybe of hyper-growth start-ups).
- jewel 4y ago
  You can make the profit sharing bonus proportional to salary. So if there is 100k available for bonuses and your quarterly payroll is $1M, then pay everyone a 10% bonus. You still have to set salaries correctly but that's a problem whether there is a bonus or not. I've seen this work well at a small software company. It paid out once a quarter for anyone who had been there a year.
- andrekandre 4y ago
  > we have to measure what your individual contribution to the company's profits was we do?
  - t_mann 4y ago
    Well, we gotta find some way to split it, we could use any metric though, true. We could pay everyone equally, or make it a lottery, or donate it to charity in the employees' names, or whatever you can think of. But we have to make a decision.
    - andrekandre 4y ago
      > But we have to make a decision. true, i guess my question was presupposed more on top-down decision making, but as you said, there are many ways to go about that decision
- sofixa 4y ago
  At my previous employer it was first proportional on tenure, and then switched to just divided to everyone equally.
  - t_mann 4y ago
    And how were those perceived by employees? Genuinely just curious.
    - sofixa 4y ago
      The switch was accompanied by grumbling by tenured employees, but it wasn't the only switch ( post-acquisition with lots of "harmonisation" of tools, processes, etc.) so many left anyways. Besides that, there weren't many discussions on the "fairness" of either system, people just went with it
  - password4321 4y ago
    Wow, that would have been quite the transition!
- krallja 4y ago
  In my case it was tied to how many shares or options you held.

t_mann 4y ago

How is that different? Somehow we have to measure what your individual contribution to the company's profits was, which, unless you work in sales maybe, is going to involve a lot of judgment.

jameshart 4y ago
At Wrox Press during the dotcom era editorial staff were comped with direct sales-derived royalties. Was the most connected I have ever been to a metric that clearly mattered to the business. There were some perverse incentives - people wanted to work on bestsellers, there was jockeying for credit for carryover work from previous editions, but in general it promoted a creative energy around trying to publish hit books, editors had a good deal of direct ownership that could actually impact the product they were shipping, and the scheme even helped align you on the same team as authors, whose compensation is also royalty driven - where for many other publishers author royalties are almost in conflict with what the publisher wants from the deal. Such a direct unit sales driven profit share is hard to imagine engineering into many other businesses but it’s always stood out to me as a remarkably powerful model.
- t_mann 4y ago
  Yeah, everywhere that's close to sales it's usually possible to attribute revenue shares directly. But even in those organizations a lot of people will be doing work that can't be directly measured (IT, accounting,...), so either you cut those people out of bonuses or you find some metrics to include them.
  - jameshart 4y ago
    Editorial work is not close to sales. It’s upfront product development work. What Wrox did, though, was very clearly assign editors to book projects. You worked on one book at a time - each book was a little startup venture that shipped a product at the end.
    - toast0 4y ago
      Editorial work is close to sales in that it's clear that editorial quality impacts sales and it can be clear who did the editorial work on an item that sold. (Depends on the editorial process though, if you do a lot of group work, maybe it's hard to say who did how much). As opposed to IT work where sure, if the editors computer doesn't work, it's hard for them to do their editing, but there's not much connection to a specific item.
      - jameshart 4y ago
        Well, that’s rather my point. Most publishers don’t run editorial work like that, but if you are able to organize your teams around products that have clear revenue streams, even indirect work can be attributed to it. Look at the credit roll on a video game and you’ll see credits for ‘IT support’. The lesson I take from the Wrox experience is that there might be ways for other businesses to pull the same trick and get the same benefits. But I’ve not often seen it attempted.
        t_mann 4y ago
        If you are able to organize your teams around products that have clear revenue streams, even indirect work can be attributed to it That's pretty much what every finance department in every company on earth large enough to have one does (with notable exceptions maybe of hyper-growth start-ups).
jewel 4y ago
You can make the profit sharing bonus proportional to salary. So if there is 100k available for bonuses and your quarterly payroll is $1M, then pay everyone a 10% bonus. You still have to set salaries correctly but that's a problem whether there is a bonus or not. I've seen this work well at a small software company. It paid out once a quarter for anyone who had been there a year.
andrekandre 4y ago
> we have to measure what your individual contribution to the company's profits was we do?
- t_mann 4y ago
  Well, we gotta find some way to split it, we could use any metric though, true. We could pay everyone equally, or make it a lottery, or donate it to charity in the employees' names, or whatever you can think of. But we have to make a decision.
  - andrekandre 4y ago
    > But we have to make a decision. true, i guess my question was presupposed more on top-down decision making, but as you said, there are many ways to go about that decision
sofixa 4y ago
At my previous employer it was first proportional on tenure, and then switched to just divided to everyone equally.
- t_mann 4y ago
  And how were those perceived by employees? Genuinely just curious.
  - sofixa 4y ago
    The switch was accompanied by grumbling by tenured employees, but it wasn't the only switch ( post-acquisition with lots of "harmonisation" of tools, processes, etc.) so many left anyways. Besides that, there weren't many discussions on the "fairness" of either system, people just went with it
- password4321 4y ago
  Wow, that would have been quite the transition!
krallja 4y ago
In my case it was tied to how many shares or options you held.