If youâ€™re running a wildly successful and profitable business, donâ€™t hide it. I talked to a business owner from Las Vegas once, and he was nervous to let his employees know how much money he was making.
He said, â€œOh no, I wouldnâ€™t want them to know how much money I make.â€
I said, â€œDude, you get driven to work in a 40-foot limousine and have two private jets. Your staff gets it!â€
Sharing a percentage of a companyâ€™s profit with employees is excellent, but employees have to earn it and treat profit the same way owners do – otherwise youâ€™re wasting it.
Every month, get all the employees to meet and review the income statement together. During that meeting, look for and obsess as a team about how to make more money, and how to save money in the business.
I learned this process twenty years ago running a painting business (College Pro Painters). Â Iâ€™d hired nine of my friends, and they all hated me because I seemed to be making all this money. In reality – I hadnâ€™t started making money yet! They knew what my revenues were, but they had no idea what my expenses were, and that meant that they all thought that I was making more profit than I was.
The moral of the story?
When I started to show them that I wasnâ€™t making any money, they got scared for me, and themselves. They thought â€œHell – if we donâ€™t get this guy to grow a little bit more, save him money, and help him be profitable – we might be out of a job part way through our year.â€
Showing your employee’s income statements, as well as expenses, will show them that although a lot of money is coming in, a lot is going out too – and it will light a fire under them so they’ll work harder to make more money for the company.
Jack Stack has a program about this called the Great Game of Business.
Conclusion? Give your employees a percentage of the profit and watch how much more money youâ€™ll start to make.
The COO Alliance is here to help with these, and many other challenges facing COOs today. For more information, apply now.