In addition to base compensation everyone who has been with the company for 3 months or longer and are full-time or part-time, partakes in profit sharing. Profit sharing is not a component of the role compensation minimum and maximum ranges. It is paid in addition to that compensation and what it pays depends upon a wide number of factors including seasonality, what investments we have chosen to make at the time, etc. Profit sharing pays 25% of the 6 month moving average operating profit on a cash basis as of the previous month, at the end of the current month. The profit sharing amount is paid out equally to all full-time employees and proportionately for part-time employees based on actual hours worked, up to the max of their total base compensation for the current month. In other words the most you can earn in profit sharing in any given month is the amount of your base compensation which could effectively double your wages. All calculations are adjusted to Canadian dollars as of the current month’s foreign exchange rate.
For example let’s say there are 8 people partaking in profit sharing in our example company. This month there is enough in the profit pool to pay the full base compensation of the 2 lowest base compensation earners, the next 2 and the 2 after that, but there is not enough to fully match the 2 highest earners and than they will receive the amount paid out to the tier immediately below them.
Knowing how the company is doing based upon the profit allocation you receive is a good first step, but it is only part of the story. To align everyone within the company and to make sure that we have all of the facts that we need to make decisions, day in and day out, we must understand what makes up that profit. To this end the financials of the company are reviewed and discussed with everyone at the close of every month. Everyone needs to know how we make our profit so that they can independently make better decisions. The end result is everyone knows how we are doing, where we have problems and opportunities, and they are rewarded for the decisions that they make based upon that knowledge by the profit we share.