Peter is very right with c) though, taking everyone out to dinner and drinks when they have completed a large project does go down very well.

A. Do it in a way that it doesn’t give the employees a sense of entitlement. If they expect it in the future, and it doesn’t come, watch out.

B. Be fair across the board, or the resentment that grows might outweigh the good feeling you spread from sharing.

C. Sometimes creature comforts work better than money, extra time off, free lunches, that kind of thing.

Finally, congrats on making money!

The upside to the employee is the money isn’t taxed so they get 100% of it earning for their retirement.

I don’t have any specific recommendation, but I think it should be done in a way that your employee’s don’t eventually take it for granted, and so that they know that it is really something from you showing that you appreciate them and they don’t forget that.

If you make it profit share, all of a sudden it’s part of the salary expectations.

A true story from a mining company 6-8 decades ago:

The mining company wanted to increase production but wasn’t sure how to do it. Thinking the people in the mines would have the best ideas as to how to boost production, they gave them an incentive plan that was clean and simple: every car of ore produced over the current level earned a specific bonus.

The mine company bosses were right. Production began to take off, resulting in more cars of ore, and with less labor per car. As an added benefit, the methods the miners developed also resulted in less dynamite used per car of ore. It was a winner all the way around.

Then the bosses started to not like the sizes of the bonus checks they were writing, as some of the miners were making more than some of the bosses! So they changed the incentive package - since it was only taking X sticks of dynamite to produce a car of ore, the new incentive package was that for each X units of dynamite used, miners would receive Y in bonus.

Guess what happened?

Those mines were blown to shit in no time.

Dynamite use went through the roof, ore production dropped like a stone, and the company had to keep writing big bonus checks.

They ended up going bankrupt not much later.

Seems obvious in hindsight, but lots of profit sharing plans look great at the time they’re developed, only to incent something other than what was intended, and the whole thing turns into a mess.

Not saying you shouldn’t do it. You should. Just take it slow, seek the input of people who do that for a living.

State a clear percentage to be earned individually or collectively.

For example A link builder has to get 10 edu’s per month to receive x

or

A writer has to write one hundred four hundred word articles for clients and twenty one thousand word articles per month for WBP promotion. to receive the profit sharing.

IMO above all make the goals very clear. I saw profit sharing backfire one time becuase the employeer had one goal in mind and the employees thought another.

The final question is pre tax or not? You can set up some awesome pre tax plans but the employees can not get their hands on the money unless for qualified expenses (medical, buying a first home, college tuition). Or you could hand them a check and watch the evil tax ax fall.

Great idea Jim money does motivate most people.