David Branch of Branch Contractors sent in a few great questions about profit-sharing. In Q & A On Profit-sharing I answered David’s questions on how to explain profit-sharing to a prospective team member, as well as how to pay it out. Today we continue with the rest of David’s questions:

David – In the probationary period of a new hire, do I offer a higher salary at the beginning, with the understanding that after the probation period, the salary will be reduced due to them being enrolled in the profit-sharing program?

CLo – Absolutely not. The salary range for the position needs to match what the position is worth. The amount in that range that you pay to the new hire should be based on their experience.

Profit-sharing is given freely from the owner/leaders on top of salary as a way of rewarding team members for going the extra mile, as well as a way of incentivizing them to continue to do so. Otherwise, if you want to keep the salary low, but have them count extra moneys as part of their pay, you would need to put them on some sort of commission plan.

David – I hired a guy about three months ago understanding that he would only be temporary, (moving family to Texas) but was hoping he would possibly stay.  I put him on the profit-sharing incentive and he has done well. As it turns out, he is moving July 15.  My question, since he is moving, should he receive a bonus on the 15^th? Kinda simple but I’m still trying to get this profit-sharing figured out.

CLo – Another great question. I have no problem with you paying out profit-sharing for the time that he works with you. If the 15^th check is for the previous month, go ahead and pay it out. He contributed to the profit made during that time. However, if the he was leaving because you let him go, then I feel you have no obligation to pay him from the profits. Salary? Of course, because he earned it.

Questions: Do you have any questions related to profit-sharing? If not, are there any other subjects you would like answers to? If so, click comments and let me know.

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Related articles

• Q & A On Profit-sharing (ChrisLoCurto.com)
• How To Do Profit Sharing (ChrisLoCurto.com)
• How To Do Profit Sharing Pt. 2 (ChrisLoCurto.com)