Showing posts from July, 2018

Who shares in a company's success?

Profit sharing is designed to reward hard work and drive behavior for the good of the business. Hewlett Packard had a profit sharing plan in the 80s and 90s that fed all job titles and pay ranges.  I participated an HP plan that made all profit sharing plans after that point complicated, opaque and tilted towards the higher paid employees.  The HP 10% Profit Sharing Plan HP distributed 10% of the company's profit to the employees on a semi-annual basis . This meant everyone was reminded of the company's health every 6 months.  Seniority and time served played no part in the formula.  This was unlike many of today's two tiered retirement or incentive programs where younger hires have weaker deal. The Profit Sharing bonus was pro-rated based on the employees salary capped at $100,000  basis.  The pro rating and salary cap meant the paid out dollar amounts for factory line employees and executives profit sharing amounts were closely aligned. Payout The HP plan paid e