For 14 years in my last business, we had a profit-sharing plan. I thought it was brilliant — reward people, build culture, and give everyone a little extra skin in the game. What could go wrong?
Well… everything.
The reality is that our plan didn’t change behavior, it didn’t drive profits, and it quickly became just another payroll expense. People liked it — who doesn’t like “free money”? — but it didn’t motivate anyone to think or act differently. It was like putting a treadmill in the office: everyone appreciated the gesture, but no one actually used it.
That experience taught me (the hard way) what I now teach through ProfitWorks: if your incentive plan isn’t self-funded — meaning the payout is covered by the extra profits your team generates — then it’s not really an incentive plan. It’s just a bonus.
The Six Common Mistakes
At ProfitWorks, we’ve identified six reasons why most incentive plans flop:
- Too complex – nobody understands how it’s calculated.
- Discretionary – payouts depend on someone’s opinion, not a formula.
- Creates silos – departments compete instead of pulling together.
- Unattainable – goals are set so high no one believes they’ll ever see a payout.
- Disconnected from day-to-day work – employees can’t see how their actions impact results.
- No perceived value – payouts are so small they don’t motivate anyone.
Where We Went Wrong
Looking back, we checked off five of those six mistakes.
- Too complex: Our plan had four factors — tenure, attendance, salary level, and a subjective “teamwork/attitude” rating. It was like doing your taxes with no calculator. Nobody could explain how the payout was actually determined.
- Discretionary: That teamwork rating left too much up to a manager’s opinion. Nothing kills motivation faster than wondering if your bonus depends on whether your boss had coffee that morning.
- Created silos: Commission-based salespeople were excluded. Instead of pulling everyone in the same direction, the plan drew a line between “us” and “them.”
- Disconnected: Most employees had no idea how their daily work tied back to profit. They couldn’t connect the dots between what they did on Tuesday afternoon and the profit-sharing statement at year-end.
- No perceived value: Our trigger point was ridiculously low — less than $50,000 in a $7M business. Some payouts were so small they felt more like a coffee gift card than an incentive. People appreciated the gesture, but it didn’t drive results.
The only mistake we didn’t make was setting the plan unattainably high. Instead, we went the other way and made it too easy — which, ironically, had the same effect of killing motivation.
The Turning Point
What I learned is this: profit-sharing, done poorly, is just another expense. It doesn’t inspire ownership thinking, it doesn’t drive behavior change, and it doesn’t create alignment.
That’s why I’m so passionate about ProfitWorks. It fixes those six mistakes by creating a self-funded plan that is simple, objective, inclusive, attainable, connected to daily work, and meaningful in its impact. When done right, it not only pays for itself — it creates real alignment between owners and employees.
If any of this sounds familiar — if your incentive plan feels more like a payroll expense than a profit driver — I’d love to help you avoid the same mistakes I made.
In fact, I’ll send you a free copy of the book Profit Works. Just shoot me an email at jon@tribridge.ca, and I’ll make sure one gets into your hands.
Because the right plan doesn’t just share profits — it creates them.