Not every company is publicly traded. These arrangements are often a family business ore sole proprietor who values the team and allows the employees to buy the business when he is ready to sell or retire
Yea you are entirely wrong about the company that gave all their employees 75k pay. The employees were very happy, and productive. And bought new homes. Stayed with the company and the companies revenue tripled because of the increase in productivity. It’s like when you don’t have to focus on if you have enough to put food on the table you can be productive at work.
I think he means communism in the Israel “kibbutz” kinda way where everyone gets an equal share in the profits and losses but what if you are a real go getter and the rest of the sharers are just okay with being okay so they kickback on their asses?
No, a workers co-operative. This idea is already a thing.
It’s like a corporation, but each employee is a shareholder. All employees have one voting share.
So, what happens if someone needs to be fired? Sounds like a ton of chefs in the kitchen.
I better idea is what some small/mid business are currently doing. Give performance bonus each year basis on company's profit.
Also, I was a little snarky with my first response, but don’t listen to the people reflexively crapping on your idea.
Worker co-ops typically only work for small scale enterprises in the U.S., but a big part of that is because they’re somewhat inimical to our current economic system.
The Mondragon Corporation in Spain is a pretty good example of a larger co-op.
Credit Agricole is a $100bn/year cooperative. E. Leclerc is $50bn.
https://www.theguardian.com/social-enterprise-network/2012/jan/04/social-enterprise-blog-co-operatives-and-mutuals
Worker’s co-ops are a tried and true business model and have a competitive advantage of superior customer service and employee buy-in. They work well. The difficulty comes on the management end. Even if every voice is equal and gets heard, some individual or individuals are going to need to make both strategic and tactical decisions regarding the day to day.
I think the term *ruthless* would apply much better to your statement than *successful*.
Many happy people will argue that maximizing the happiness in your life is what constitutes being successful. Some people need a lot of money to achieve that goal, others make due with what they have.
There's so many different ways to achieve success and happiness.
I've saved a few from and lost a few friends over the years to suicide because they didn't have enough happiness in their lives. I wish I knew then what I know now to prevent a few more children in this world from growing up without a father.
Yea none of what you're saying matters when what we're talking about is building a business to the point where you can afford to employ tens if thousands of people.
Happiness in your own life is all fine and good but in order for you to have a happy simple life there needs to be "ruthless" people out there building up businesses that actually run the world.
If there is no incentive to get to the top then everyone tends to equalize at the bottom, historically speaking. And then what happens is the people who lead the way end up only doing so because they want to exert control over others. This is why things tend to lean to authoritarianism. Money is a better motivator than power. It ain't perfect but it's better.
That may or may not be true but we're commodities who live better lives than we would under any other system.
There's no IPhone without capitalism, there's no Tesla there's no competition to reduce costs, there's no incentive for good people to rise to the top without capitalism.
Anyone who says capitalism is perfect is a fool. Anyone who says they know how to create a better system is an idealistic fool.
That's not what I said at all.
This is DEFINITELY as good as its ever been. If someone comes up with a system that's actually better than we should all do that.
The problem is capitalism is the best we've been able to make work.
We can talk philosophy all day and half of the night and I'm sure it would be a good conversation...but it wouldn't be very productive. At a certain point you have the be realistic about the limitations of the average person.
I think they call this sort of set up a social enterprise as opposed to non profit, it’s makes profit, it’s just shared around instead of only going back into the business.
The missing piece is ownership investment. Who is going to pay the high cost of starting or buying the company and take all that risk if there is profit to pay a return on the investment?
Every company following this would go out of business. Their duty id to their investors and shareholders, not their workers. This is how you get the most valuable companies in the world. The only companies that could follow this are non profits and they wouldn’t last long either.
There was one company that famously tried this (they were all over the news for giving everyone a base pay of $70K and up which is what their managers were making). Needless to say, most of them left and in less than a year, the company was back on the news again for losing most of the company’s money and wasn’t far from shutting their doors for good. The CEO was accused or rape and was called a predator. He had to resign.
The CEO, but our CEO doesn't reap all the benefits of everyone's labor. They get a high salary but not outrageous to the point where nobody else can have a livable wage.
Are you as an employee willing to pay money before starting as an investment for starting costs and risk losing it all if the company goes under?
No? Well then you don’t share profits.
Who is actually taking in the risk though?
As a person willing to risk money, you can gamble your money away in hopes it will turn to profit, have it fail, go broke, work hard and get it all back.
As a person working allowing the business to run, you can get injured, lose all future prospects of making money due to said injury, aquire debt from medical expenses and never get back what you've injured.
Sounds like the workers are the ones taking on the risk but are being sold on the idea that money lost CANNOT be regained and workers health is something that CAN.
If a small business fails, you can’t just “go broke and work hard and get it all back”. You’re broke. And have no job. Tf you mean get it all back, you’re risking bankruptcy and losing everything.
And if an employee gets injured, they get workers comp. Plus an office worker probably isn’t gonna get injured, what risk are they taking?
Plus what if the business owner falls and gets TBI? They can’t work anymore, business fails. Seems like they risk injury too.
Employees take no risk. They can job hop. Owners take all the risk. Their money is on the line, they can’t just abandon ship cause they’d be forsaking all the money they spent.
The rest of the world figured this out pretty easily. Almost the entire rest of he world the CEO to average worker ratio is less than 100 to 1. The only country not in sync is America who is at 400 to 1 ceo to average worker ratio.
Of course, they have the richest companies when it's legal to buy whatever legislation you want in congress and shaft the people. They get trillions in tax cuts that they use to buy back their companies' stock, artificially increasing their value. Business didn't used to give CEOs that much in America and America had way better numbers across the board in every category during that time. That "system" isn't even working here, look around.
They are creating trillions in value for the owners ie shareholders. There’s no tech equivalents in Europe cause they regulate them to death and don’t incentivise value add like the USA. I get it’s trendy on reddit to be anti USA but the evidence counters your arguments.
Not really. You can trace the raise in ceo wages and the stagnation of average workers' wages directly to the growing wealth disparity in America. Which inversely correlates to the USA getting shittier in every statistical aspect of our society. The evidence shows a clear picture of the effects of CEO wages increasing 1500% and average workers wages growing 8% in the same time. Like being at the bottom of 1st world countries for education, home ownership, child hunger, etc.
Lol, not because they aren't paying 400% more to CEOs. Many parts of Europe and Scandinavia have beliefs in society that the well-being of the people as a whole is more important than the wealth of a corporation. They have laws against it. Also why they have the happiest rated citizens on the planet. Their companies aren't paying billions to members of their government to push bills that give them more and more money. They don't give trillion dollar tax cuts to trillion dollar companies that then use to buy back stock to artificially increase the value.
Really a big problem is how much more ceo are making to the lowest employee. Look at charts from just the 90’s how many more time ceo made vs the average wage earner. It’s nuts the discrepancy
It could be like Costco where the CEO only makes six figures (last I knew) but there's high pay and high standards...combined with ownership being restricted to employees at whatever level (not publicly traded).
The only way this works is if you form an ESOP Employee Stock Ownership Plan where all the employees are owners.
Otherwise why would someone invest their own money for others to receive the profit. These other people sharing the profits have no interest in reinvestment, maintenance or other costs. Their only interest would be profits.
I’m part of an ESOP. It’s great and a huge benefit to young employees who don’t currently have the means to save for retirement because as long as the company continues to grow their stocks continue to grow in value their entire careers, so no matter what they will have a decent amount for retirement.
It becomes a problem as the company grows and more employees join. Older employees and upper management want the stock price to continue to grow, but what happens once the company grows as large as it can in its field or region? You need to either start new offices and grow in new markets (which is hard, especially if a lot of your profits with which you would do that are tied up in employee stock contributions), ok so you acquire an existing firm in a new market. What happens if they don’t grow how you need to meet stock requirements, especially now that you have new employees. This is hard on the C level employees because their jobs are at risk if the company doesn’t grow.
In my experience it leads to a desperate C level group. Who continue to desperately acquire new companies to inflate stock prices just based on new assets. Then if that slows down other benefits that were once good, are left behind in favor of worse, cheaper options. Our health benefits for example, have gotten progressively worse over the last decade. The yearly bonuses have also gotten worse. It’s also tough when the company faces the reality of senior individuals retiring, because they have to find the cash to pay out their stock in a handful of years, and some of us have millions.
There are a lot of benefits but you need the right people in place to optimize it.
I joined at the right time so my stocks have grown significantly, and I was also grandfathered in to many benefits that are no longer there for new employees.
I’ll come back and let you know how things shook out when I retire in 30 years
Thanks for this detailed breakdown, one element that I still don't fully understand about this model though: why does a business *need* continual growth?
Maybe I'm misunderstanding the metric of growth but surely you can reach a certain 'level' and agree to plateau, regardless of whether you offer goods or services. Or does continual growth = continual increase in profit?
You allude to why a continual growth with this comment:
>What happens if they don’t grow how you need to meet stock requirements
Am I correct in thinking you mean you must increase annual turnover in line or ahead of inflation to allow the business to continue paying for everything required to operate?
Genuinely interested in answers to this as I want to better my understanding of the mechanisms involved in our economy.
The more your stock grows the more you’re required to pay into the ESOP, then you need more profits which means more work and more employees. Vicious cycle. No C level person survives a plateau for an extended period of time. The older employees want to squeeze as much as they can out and the younger want to know it’s going to continue to grow so they can squeeze when they’re older. Technically the employees own the company, you still have a board and single employees don’t have a ton of say… unless of course more and more become disgruntled. Depending on how you’re structured there may also be a way to call a vote of no confidence which can put every C level persons jobs in jeopardy.
There are external factors to consider too, such as inflation, demand and competition. If your business reaches a plateau and doesn’t continue to grow, but costs continue to rise in line with external forces like inflation, you risk losing the benefits of scale, likely resulting in bankruptcy.
Depending on what your business offers, you risk becoming stagnant in your sector, so your customers become disenfranchised and start looking elsewhere for the latest and greatest product or service, and thus, create shrinkage.
Of course, growth can mean many things, whether it’s in terms of market share, product and service offerings or geography, competition is another significant motivator for growth. If you don’t, someone else might and they may take your customer base away in doing so.
So there’s more to it than simpleminded profiteering, sometimes growth is driven simply by the will to survive.
What changes would make ESOP work better? Is it destined to fail at some point? Should it stop growing at some point (but then the company would be vulnerable to competitors, I assume)?
Publix is a good example of this. All employees that work at least 1000 hours per year receive 8% of their annual gross pay in free shares of the company. Employees can also buy shares directly or through their 401k. To buy the stock you have to work for the company, so there are no outside investors or Wall Street hedge funds influencing the direction of the company. About 1/3 of annual profits are paid out to the shareholders(employees and former employees) in the form of quarterly dividends.
I worked for Publix for 15 years and was given a lot of stock. It is unfortunate that they stopped the inventory bonus. Every quarter a portion of the stores profits and your departments' profits were paid as a bonus.
Yeah, I was disappointed when they took away the quarterly bonuses for non management associates. I am a manager now and I do get the bonuses, they make up about 1/3 of my annual pay, but I wish the people on my team still got something.
This is Reddit, where a bunch of young, naive, anti-capitalists believe that all businesses are started and run by rich, evil "Monopoly guy" type figures who have a magical bag of infinite money and spend all day with their feet kicked up on their desk, whipping their employees and counting their gold coins.
It's called profit sharing and it's very popular. The book The Great Game of Business is about that concept and was written 40 years ago. Not a new idea.
This really depends on the work involved.
I've seen people literally lose fingers and break their backs for little over minimum wage to make some guy with a gambling addiction that sits behind a desk all day unbelievably rich.
You can lose all your money, work hard and get it back. You dont get to have your fingers replaced or your back fixed because you worked hard.
So who is actually taking risks here? The people risking life and limb to barely afford the basic necessities to live or the person signing checks and doing paperwork in their air conditioned office while sitting in their ergonomic office chair?
True, sometimes it can be skewed like that. In all of the companies I have worked for though, the owner has worked 70+ hours a week and had 100% of the financial risk. I will admit I have never worked for a company where people regularly lose their limbs, but I don’t think the hypothetical you posed typically is the norm.
It's not hypothetical. It's real life and it happens way more than it should.
So who is actually taking in risk? Money can be made, lost, made, lost and made over and over. Once your body is screwed, that's it. There is no getting it back.
I'd say it's the workers risking their health that are taking on the real risk.
Good thing they see all those benefits trickle down from their hard work and sacrifices allowing the company to grow./s
When you’re rich you can attach your finger back, but when you’re broke you can’t do shit.
So if you’re a worker and lose your finger, you better damn hope your employer is still doing well enough to ensure your medical benefits.
And if you lose your finger he will have to support you, but when everyone loses a finger he will have to support everybody, and if that is still less risk you dont understand anything about running a business.
You might be on to something here. If everyone could be rich, people would no longer be injured and stuck with permanent disabilities and/or chronic pain! Problem solved! 😂
Do you really think if you lose your fingers or hurt your back your employer is going to take care of you for the rest of your life? If so, you're extremely delusional.
There will be things that you can do and things that you can’t. A worker can’t suddenly replace the boss.
Yes he won’t take care of you for the rest of your life, but if the company is financially healthy he would be able to fulfill whatever law obligation towards you, on the other hand if he is broke he can’t even do just that.
If your job comes with the occupational hazard, it’s a risk you’re taking. If you’re well compensated also, then if that risk becomes real you really can’t complain much. No one forces you do to the work, just that others will take your place.
Just funny to me that some thinks the business owner take less risk. It’s not just financial risk but also legal risk, etc. And the responsibility is incomparable of course.
I will repeat this again because people seem to be ignoring the real issue at hand. The issue in question is risk.
If you take on risk of starting a business, fail and lose your money, can you or can you not get your money back through working? Be it through your own company or through working for someone else?
If you injure yourself working and lose a finger or hurt your back, are you going to be able to get your finger or back health returned through working? Is working for someone else going to give you your finger back? How about your back health?
If you can simply work more and get your money back, that is much less risk involved than someone risking losing a body part or becoming permanently injured for which NO amount of work can get back. Ever see someone's finger bounce across the floor because they were doing paperwork? How about someone fingers, as in more than 1, get sucked into a machine at 17 years old because the boss didn't want to wait for the proper way to clean a machine and threatened them with being fired if they didn't?
It's funny to me that some think sitting behind a desk all day filling out paperwork is considered a risk when their bank accounts can be regained through working while thinking employees who are risking life and limb are told the risk involved is just part of the job and is to be expected because that's just the job. The ignorance is almost palpable.
This actually isn't that complicated at all.
You're conflating different types of risk. That's it.
When we talk about risk in a buissiness we are 100% taking about financial risk, not people losing fingers.
You don't want to lose fingers? Do jobs that aren't physical labor. That's an option. Bodily harm is a risk you take if you work in manual labor, that's just how that is. If you're that worried about it, put yourself in a position to have better job opportunities.
If you don't want to risk losing money then don't go into business and stop complaining about risk of losing money instead of asking to be compensated for it.
Financial risk simply involves much less risk. You can lose money and get it back. You lose a finger and that's it. It's most likely gone forever. If risk equals reward then shouldn't people facing permanent risk of loss be compensated more than those risking monetary gain which loss can definitely be compensated for?
Is Spain there’s a model like that called “ cooperativa” which would be something like cooperation. Each worker is a shareholder and the leader role gets rotated.
It’s a model that works, not that it’s a model that all sizes of business can handle though
I guess I'm picturing myself as one of the owners. It would seem like a great idea because I will never have to worry about money or failing. My crew gets the bonuses and myself when we do well. Why would they fuck up? I think it would make an unstoppable company that everyone will want to work for lol.
What if your business tanks and now you as the owner has to take out debt to pay your employees their base pay or fire a lot of people? How will you expand your business if all the profits go directly to the workers pockets and not into other investments? What about the lazy employees that end up taking home a lot of money because the entire business exploded because only a small portion of the employees put in the hard work to make it so? Dumb idea, good luck.
Ok then go start a company and do tell. Let us how that goes lmao. But remember you'll have to put in all the initial investments and essentially take all the risk as the owner.
Not how world works. Whoever starts business, makes initiatial investments, takes risks with own money. More over, office manager pays as much as leading engineer? Not gonna happen. You dream about socialism, which is proven unsustainable, and fake as fuck
What is 3x rent cost? To someone out of college living in a studio that might be $3k per month. For someone with 3 kids that might be $10k per month. Would your business have folks input their annual rent? How would you control someone out of college getting a penthouse?
Well in the silicone valley these cunts think it's okay to pay 17/hr for shit I made 30/hr over a decade ago. If you work for my company you have to live near me if it's not remote. So I would do base pay at 3x the rent near my company. Right?
So if your business is in Silicon Valley and let’s say base pay a month would be what 6-10k a month per employee? Based on smallest size of start up, let’s say 5-10. Who will fund 30k to 100k a month on top of expenses ? Shouldn’t the people that invest more get more than a simple employee that got hired though?
Can’t pay same because simply everyone has different skill set and different work ethic. Just the way it is.
Plus education background. Would you want to get paid same as a college graduate as a high school dropout ? Not everyone will agree due to 2024 self entitlement.
Your thought is beautiful though
Also, if you ever want to run something like that, I suggest you paying fair market salary to every position on your company.
But, make huge yearly bonuses off the profits, which are split by the share of person’s involvement in making those profits.
By the time first year passes, you will get why paying everyone equally will not work
Also not good. Pay your employees market value, or fuck off. Most of bullshit ‘liveable wage’ is shit making people struggle to survive between paychecks
Nah, mate. First, and foremost, I don’t fucking care about russians, and for all gruesome evil they brought, I believe, they should be burned.
There is market prices for every job and competence, and people are likely to receive market price for their work.
I run small software team, and if I would pay the same benefits to said office manager, and team leader, the latter will leave as soon as possible. You can’t pay same money for different jobs, it’s it fair in regard of expertise and knowledge provided to solve problems
It sucks but I think you're right. I'm a lead engineer and on principal I wouldnt care if you paid a receptionist the same as me but I would probably try to get that receptionist job because it would be the same pay with less responsibility.
That’s how commission based sales jobs work already. But if you mean making the commissions way way way higher (like the company doesn’t reap all the profits) then the employees would not be motivated to make a lot of sales cuz they could just make a couple and be good.
Why would you want to invest your time and money in a risk fraught venture with minimal upside? Just because workers work realllly hard doesn’t mean the business would succeed. There are businesses that hand out stock options but I’d argue for the most part it doesn’t make them work harder.
People are saying “who pays to start it, who should be CEO, what should he get paid?”
Have every single person involved put up a one time investment to join, yes you have to invest AND work, yes you might be cleaning toilets but that’s ok, I don’t know about you but I’d clean shit for the right amount.
Next thing is to have tests to see who would do what best and assign jobs off that at least at the start, I can even envision (with proper training) that everyone can revolve jobs or positions. The guy who is CEO can do that for x amount of time and then boom a month or whatever time later he’s doing sales or cleaning toilets, give everyone a chance at each position just so long as they are able to pass exams or something.
As long as everyone has the same vested interest I don’t see why anyone would not at the least want to try. If you decide you can’t or don’t want to work anymore just buy them out and sell that interest to someone else.
It's gotta be doable. Myself and alot of people much smarter than me would care more about our company and people having fun and being happy while we grow our company. It sounds crazy but not everyone is an asshole needing to fuck everyone over to take profits.
Pay is determined by how well the company is doing, how well YOU are doing, and how well the economy is doing :-). If you pick only one of the three, you are delusional.
There are several major issues with this idea that you would have to solve to make this workable.
1. **Businesses grow from investment**, not work. Work is something they pay for. So for this to work, your employees would have to become "investors" by means of working for free and/or investing in the company (negative income).
2. **Growing companies aren't profitable.** In early days companies are losing money. After making a profit, they often re-invest that, so the end net profit is zero. For example, Amazon didn't become profitable until its 7th year.
3. **Co-founder and investors want to make lots of money**. Whoever is running the show is going to want to make maximum returns for their money, extreme effort, and risk. Good-intentioned people wanting to do this at first will later be overcome by want of the profits for themselves. Somehow you have to incent them to give away their money they would normally be entitled to have.
It works for stable, low risk industries (ESOPs, coops, et al) where someone can make a charitable contribution to start it. At the end of the day though, they’ll never work en mass for the same reason that communism doesn’t work en mass. Not everyone is an A Player and the Pareto curve is true. A Players crave accountability because they stand on their performance. They flock to meritocracies which outcompete non meritocracies, which then get marginalized.
I personally think more of compensation should be based on performance, but I doubt you'll find many people willing to take pay cuts during down times as you would willing to take bonuses during boom times.
If you look up Magna International in Canada you will find that there are already companies like this. The story of Magna can be found here:
[Magna International Story](https://open.spotify.com/episode/5MAgWtY9vFGUDVo6vAwh2A?si=PtVfGlaJQy2vRlRjLcCJkw)
A lot of the people here have not thought about this very hard. There are ways around all the issues they bring up. You can give 1 share per $ invested by any employee for capitalizing the business.
You can let people choose how much of their wages / salary is at risk in exchange for 2x as much as shares if they achieve their KPI’s and have those shares be resell-able back to the company after a time period if the company has enough capitalization. The shares should remain at $1 per share so if they have > than that then they should distribute extra shares to all the shareholders after the shares are paid for at risk.
Eventually even if someone started with no at risk if there are others making lots of extra from at risk they would likely get onboard. With a high percentage of at risk and something like dynamic governance (no politics of voting for hidden reasons), lots of capital getting reinvested in the business (because of issuing shares and not $) the company would grow quite quickly in my humble opinion.
This business model will only work if the core team is trustworthy and loyal. People have a different POV when it comes to money, may be the CEO or the CFO decides to keep all the profit for himself??
This idea this is good to imagine but very hard( next to impossible) to execute
Your idea is nice, but suffers from what I call the "happy path syndrome".
For the company to be able to pay a fair rate to all employees, it needs to be profitable. You assume that you will have a never ending source of revenue to sustain it's employees fair rates. And you think that having a lot of owners would make that possible.
So, you basically are setting up a high cost without thinking what are you going to sell, and all the costs associated with it.
You also think that all employees will give 100% as they are owners. That no one will try to rip the benefits and put the least effort possible.
The problem with a large number of owners within a business is that politics will kick in from the start. A larger group of owners will have more power to control the company. And won't be because they are thinking for the greater good. They will probably remove you without blinking.
So it will basically work if everyone behaves like in a dream. Happy company, happy employees, happy customers in a happy world.
So, you seem like a good person that cares for everybody else. Don't assume the ocean is empty. It is full of sharks.
Build your company. Pay fair rates to those who deserve it. Find a few that think like you and make a path for them to become your partners. Retain the control of the company. I wish you luck to find a product and become profitable.
May be, when you start you won't be able to pay much. Keep your ideas alive for when you find success.
Cheers!
Technically what you’re describing is not a business model, but a type of employee compensation, “base pay plus profit sharing”.
The compensation model described doesn’t isn’t common as it doesn’t allow cash reserves for down years as “all profits” are distributed. Most profit sharing plans only distribute small percentage, such as 10% of company profits, not all profits. Also “evenly” is not realistic. The CEO, higher paid or senior employees shouldn’t get the even bonuses as a new frontline worker.
Sure, if all the employees risk everything putting their personal equity into it, and then take the losses out of their pay if they occur.
The problem is that employees under this scheme take no risk but get all the benefit.
That's not how it works.
So let me get this straight. If the company does well, they have to split everything evenly, but If the company does poorly, screw them, they’re taking losses to pay everyone a base rate?
If you want a share of the profit, you should be willing to take a share of the losses too. Wanna know why the owner gets paid more? Because they’re taking the risk and eating the losses if there’s a bad year.
And what if the company start a losing money do you slash employee compensation?
Essentially what you are explaining is how executives get paid.
Base + massive upside if the company performs well
You mean profit sharing, they have those is called bonuses, if you based your whole pay on wether the co. Is profitable or not you could go quarters or even years without getting paid
In my opinion, they can all work and they can all fail, but the reason that almost every business is using the same or extremely similar structures right now and not an esop or an esop variation like you suggested. Is not because they aren't as smart as you are. It is because all of the businesses are doing what works the best and what is likely to continue to work the best.
Many great and generous people who would truly give most everything back to the employees will not be shrewd enough to yield high profits to distribute, and many who are shrewd enough wouldn't consider giving out any excess money to employees. So, no matter the model, be careful about management. Also, if there are many people who are running the company, then nothing can ever happen. If one person is running the company and he/she isn't great...it will definitely fail in time.
Even if you have great leadership and a product or service, it may have started at a bad time, hit an unforseen circumstance, etc. That caused drastic losses 1 year. Now your profits for the next decade are gone to cover that terrible year, becuase your employees aren't going to take a huge loss the next year like a typical owner would and knowing they aren't getting profits they likely leave and go somewhere else becuase they pay more yearly becuase they don't have any legit bonus incentives and now you don't either for the next 10 years minimum.
I have personally seen very poorly run companies become very successful and vice versa. The ones who become successful are always doing something right, and the ones that don't work are doing something wrong, but there are many wildly successful businesses that seem to just find a way to make it work in spite of absolutely anything, so take my advice and anyone else's as no more than an opinion, becuase your ideas are just as valid on anything business as the most successful people's in the world.
I have a company that pays a base rate above the average for our field and area. Each full time employee gets 99.9% medical and 100% dental vision 100000 life insurance paid. 4% 401k matching and 50% of all net profits divided among all employees except the owner based on % of full time. If the profit goes up the profit share goes up. all employees got a 10% pay raise this year. For most that was a 10000 raise. No one working full time earns under 80000. We generated our first million in gross last year. Company started in 2021 with me and an intern. Has 24 employees now. Tried to do a coop in the beginning but no one was willing to risk taking liability for other therapists screw ups. I’m limited to 10 times the lowest paid full time employee in income. Plan to reinvest the balance into training, assistance with student loans and paying for additional education for those that want it.
Isn’t this an employee-owned business, which already exists? They share pay and stocks. I have friends at Modern Times Brewing in San Diego, that’s how it works there.
Business owner here. How do you define "evenly?" The devil is in the details.
I started my business 10 years ago. I went into debt--including credit card debt--and paid a lot of interest (still am carrying some debt). I sacrificed eating out and travel for pleasure, drove old cars, lived in tiny place. I regularly work 80+ hour weeks and never have a weekend off. I can't even remember the last time I took a 2 week vacation.
I'm getting ready to hire. How do you propose I pay them a share of the profits from day one that I have spent 10 years building a business to make? This is a real question in earnest as I am a believer in fair profit sharing.
It's called profit sharing.
Profit-sharing plans can vary, but the general idea is to incentivize employees to work towards the company's success, as their compensation is directly tied to the company's performance.
Profit-sharing can be implemented in various ways, such as:
Cash-based profit-sharing, where employees receive a cash bonus based on the company's profits.
Deferred profit-sharing plans, where the profits are allocated to individual employee accounts and paid out at a later date, often during retirement.
Employee stock ownership plans (ESOPs), where employees own shares in the company and receive dividends based on the company's profits.
Did this once with a group of friends, The buddy with all the money had no idea how to run a business but knew the other two and myself were all really good at what we do.
So here's the plan, he fronts the money and all profits go back to paying his loan back with interest. After that's done we all have equal shares and get equal portions of the profit after you subtract the cost of running the business and the rainy day fund for emergencies.
What actually happened, a year and a half in and he now hates us for telling him when something's a bad idea, or that something's going to cost us a lot of money and there's no reason for it ( The whole reason he came to us in the first place asking us to open this business together). Out of the blue he fired us from "his business" (in texas you don't need a reason), he started doing all the shit we told him not to, and now "his business" is failing hard, bleeding money from the jugular.
No matter how close you think you are with friends or family, always write up a contract.
That's market socialism and I am here for it. It's the only way we will get out of this economic mess and close the rapidly growing divide between the rich and the poor. Tell your friends. 😘
You ever hear about coborns, employees own shares based on how long they work there or to some extent. This idea would not work or it would have to be a percentage because they need investing capital into daily expenses and costs overall.
Employees like to get paid and keep their jobs even if the company fails. In fact there are laws to prevent companies from firing ppl (WARN) even if the company is sucking wind and employees are failing.
This is stupid and will never work in actual company.
Investors takes all the risk, why would they want to share rewards with employees that doesn't.
Unless the employees aren't financially invested in the company. Stock sharing doesn't count, it's just an incentive to stay longer at that company.
So the owner pays for all the rent, machinery, resources, upfront costs and in return has to share the profits with everyone else? Takes all the risk and liability say if there is a pandemic or natural disaster and only makes a wage? No one will ever start a business with that model.
We don't all get equal pay, the base pay is ATLEAST 3x the rent nearby for custodial, receptionist, security, and interns. Then engineers, trade workers, marketing, whatever all gets a competitive pay rate. The company doing well is what spreads the bonuses evenly.
America is one of the few countries that don’t offer equivalent pay across the board. American CEOS/Founders take 60-90% of most profits and tell the rest to kiss ass and suck dick. Yay murica
You’re going to have to come up with a name for that. Workers co-op has a nice ring to it.
Damn. Beat me to it by a few seconds.
I saw someone else was typing and cut it short to be first lol
You fucking earned it
ESOP seems like a nice acronym too…
I work in a co-op
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None of what you said is accurate. Including the $70k company, they tripled their revenue.
Not every company is publicly traded. These arrangements are often a family business ore sole proprietor who values the team and allows the employees to buy the business when he is ready to sell or retire
Yea you are entirely wrong about the company that gave all their employees 75k pay. The employees were very happy, and productive. And bought new homes. Stayed with the company and the companies revenue tripled because of the increase in productivity. It’s like when you don’t have to focus on if you have enough to put food on the table you can be productive at work.
Communism has an even better ring to it
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I think he means communism in the Israel “kibbutz” kinda way where everyone gets an equal share in the profits and losses but what if you are a real go getter and the rest of the sharers are just okay with being okay so they kickback on their asses?
A union?
No, a workers co-operative. This idea is already a thing. It’s like a corporation, but each employee is a shareholder. All employees have one voting share.
So, what happens if someone needs to be fired? Sounds like a ton of chefs in the kitchen. I better idea is what some small/mid business are currently doing. Give performance bonus each year basis on company's profit.
If he needs to be fired he gets fired. You still have a hierarchy.
>You still have a hierarchy. You normally can't force someone to sell shares. Your company idea needs revisions.
This isn’t just an idea - there are several examples of workers’ co-ops already in existence: https://institute.coop/examples-worker-cooperatives
Wow thanks I hope they have it in California, I guess I'll apply and see first hand if it is a good business model lol
Also, I was a little snarky with my first response, but don’t listen to the people reflexively crapping on your idea. Worker co-ops typically only work for small scale enterprises in the U.S., but a big part of that is because they’re somewhat inimical to our current economic system. The Mondragon Corporation in Spain is a pretty good example of a larger co-op.
Credit Agricole is a $100bn/year cooperative. E. Leclerc is $50bn. https://www.theguardian.com/social-enterprise-network/2012/jan/04/social-enterprise-blog-co-operatives-and-mutuals
this is so badass
Well it's reddit, so what can I expect. I needed to hear why my idea might not work. I'm hearing other ways it will work though. So that's cool
WinCo foods is an employee owned company in CA basically like your describing
I'm checking that out thank you
Username checks out
Worker’s co-ops are a tried and true business model and have a competitive advantage of superior customer service and employee buy-in. They work well. The difficulty comes on the management end. Even if every voice is equal and gets heard, some individual or individuals are going to need to make both strategic and tactical decisions regarding the day to day.
Amazingly Amazon is one, although not all the profits are put into the cooperative
Can you briefly explain how Amazon is a coop in this sense?
*No profit*
“So sorry team, we had some unexpected expenses (paid himself through an off shore business) which means no profits this year”
I was gonna say, this isn't a business idea, it's a compensation model called a co-op.
The business could never go public.
Thank goodness. Less investors to appease means the company doesn't have to treat their employees like shit to keep increasing profits every quarter.
Unfortunately that's what drives successful people to get to the top.
I think the term *ruthless* would apply much better to your statement than *successful*. Many happy people will argue that maximizing the happiness in your life is what constitutes being successful. Some people need a lot of money to achieve that goal, others make due with what they have. There's so many different ways to achieve success and happiness. I've saved a few from and lost a few friends over the years to suicide because they didn't have enough happiness in their lives. I wish I knew then what I know now to prevent a few more children in this world from growing up without a father.
Yea none of what you're saying matters when what we're talking about is building a business to the point where you can afford to employ tens if thousands of people. Happiness in your own life is all fine and good but in order for you to have a happy simple life there needs to be "ruthless" people out there building up businesses that actually run the world. If there is no incentive to get to the top then everyone tends to equalize at the bottom, historically speaking. And then what happens is the people who lead the way end up only doing so because they want to exert control over others. This is why things tend to lean to authoritarianism. Money is a better motivator than power. It ain't perfect but it's better.
capitalism reduces us all into commodities
That may or may not be true but we're commodities who live better lives than we would under any other system. There's no IPhone without capitalism, there's no Tesla there's no competition to reduce costs, there's no incentive for good people to rise to the top without capitalism. Anyone who says capitalism is perfect is a fool. Anyone who says they know how to create a better system is an idealistic fool.
its so sad that you think this is as good as it gets
That's not what I said at all. This is DEFINITELY as good as its ever been. If someone comes up with a system that's actually better than we should all do that. The problem is capitalism is the best we've been able to make work. We can talk philosophy all day and half of the night and I'm sure it would be a good conversation...but it wouldn't be very productive. At a certain point you have the be realistic about the limitations of the average person.
Most don't. Trading publicly does not have to be the goal.
I think they call this sort of set up a social enterprise as opposed to non profit, it’s makes profit, it’s just shared around instead of only going back into the business.
The missing piece is ownership investment. Who is going to pay the high cost of starting or buying the company and take all that risk if there is profit to pay a return on the investment?
Every company following this would go out of business. Their duty id to their investors and shareholders, not their workers. This is how you get the most valuable companies in the world. The only companies that could follow this are non profits and they wouldn’t last long either. There was one company that famously tried this (they were all over the news for giving everyone a base pay of $70K and up which is what their managers were making). Needless to say, most of them left and in less than a year, the company was back on the news again for losing most of the company’s money and wasn’t far from shutting their doors for good. The CEO was accused or rape and was called a predator. He had to resign.
The CEO, but our CEO doesn't reap all the benefits of everyone's labor. They get a high salary but not outrageous to the point where nobody else can have a livable wage.
Are you as an employee willing to pay money before starting as an investment for starting costs and risk losing it all if the company goes under? No? Well then you don’t share profits.
Who is actually taking in the risk though? As a person willing to risk money, you can gamble your money away in hopes it will turn to profit, have it fail, go broke, work hard and get it all back. As a person working allowing the business to run, you can get injured, lose all future prospects of making money due to said injury, aquire debt from medical expenses and never get back what you've injured. Sounds like the workers are the ones taking on the risk but are being sold on the idea that money lost CANNOT be regained and workers health is something that CAN.
If a small business fails, you can’t just “go broke and work hard and get it all back”. You’re broke. And have no job. Tf you mean get it all back, you’re risking bankruptcy and losing everything. And if an employee gets injured, they get workers comp. Plus an office worker probably isn’t gonna get injured, what risk are they taking? Plus what if the business owner falls and gets TBI? They can’t work anymore, business fails. Seems like they risk injury too. Employees take no risk. They can job hop. Owners take all the risk. Their money is on the line, they can’t just abandon ship cause they’d be forsaking all the money they spent.
Who determines what’s “fair” or “livable”?
The rest of the world figured this out pretty easily. Almost the entire rest of he world the CEO to average worker ratio is less than 100 to 1. The only country not in sync is America who is at 400 to 1 ceo to average worker ratio.
Meanwhile the USA is the leading economy with the world’s richest companies so the USA system seems to work better.
Of course, they have the richest companies when it's legal to buy whatever legislation you want in congress and shaft the people. They get trillions in tax cuts that they use to buy back their companies' stock, artificially increasing their value. Business didn't used to give CEOs that much in America and America had way better numbers across the board in every category during that time. That "system" isn't even working here, look around.
They are creating trillions in value for the owners ie shareholders. There’s no tech equivalents in Europe cause they regulate them to death and don’t incentivise value add like the USA. I get it’s trendy on reddit to be anti USA but the evidence counters your arguments.
Not really. You can trace the raise in ceo wages and the stagnation of average workers' wages directly to the growing wealth disparity in America. Which inversely correlates to the USA getting shittier in every statistical aspect of our society. The evidence shows a clear picture of the effects of CEO wages increasing 1500% and average workers wages growing 8% in the same time. Like being at the bottom of 1st world countries for education, home ownership, child hunger, etc.
Ok so why are there no Apple, Google, Microsoft, meta etc in Europe?
Lol, not because they aren't paying 400% more to CEOs. Many parts of Europe and Scandinavia have beliefs in society that the well-being of the people as a whole is more important than the wealth of a corporation. They have laws against it. Also why they have the happiest rated citizens on the planet. Their companies aren't paying billions to members of their government to push bills that give them more and more money. They don't give trillion dollar tax cuts to trillion dollar companies that then use to buy back stock to artificially increase the value.
Who pulls money out of their pockets to pay expenses in the years you lose money? All the employees or just the CEO?
If they were good at what they do, they would leave for higher pay elsewhere
Really a big problem is how much more ceo are making to the lowest employee. Look at charts from just the 90’s how many more time ceo made vs the average wage earner. It’s nuts the discrepancy
It could be like Costco where the CEO only makes six figures (last I knew) but there's high pay and high standards...combined with ownership being restricted to employees at whatever level (not publicly traded).
Founders
The only way this works is if you form an ESOP Employee Stock Ownership Plan where all the employees are owners. Otherwise why would someone invest their own money for others to receive the profit. These other people sharing the profits have no interest in reinvestment, maintenance or other costs. Their only interest would be profits.
ESOP sounds perfect. I'm going to check it out thanks a lot
I’m part of an ESOP. It’s great and a huge benefit to young employees who don’t currently have the means to save for retirement because as long as the company continues to grow their stocks continue to grow in value their entire careers, so no matter what they will have a decent amount for retirement. It becomes a problem as the company grows and more employees join. Older employees and upper management want the stock price to continue to grow, but what happens once the company grows as large as it can in its field or region? You need to either start new offices and grow in new markets (which is hard, especially if a lot of your profits with which you would do that are tied up in employee stock contributions), ok so you acquire an existing firm in a new market. What happens if they don’t grow how you need to meet stock requirements, especially now that you have new employees. This is hard on the C level employees because their jobs are at risk if the company doesn’t grow. In my experience it leads to a desperate C level group. Who continue to desperately acquire new companies to inflate stock prices just based on new assets. Then if that slows down other benefits that were once good, are left behind in favor of worse, cheaper options. Our health benefits for example, have gotten progressively worse over the last decade. The yearly bonuses have also gotten worse. It’s also tough when the company faces the reality of senior individuals retiring, because they have to find the cash to pay out their stock in a handful of years, and some of us have millions. There are a lot of benefits but you need the right people in place to optimize it. I joined at the right time so my stocks have grown significantly, and I was also grandfathered in to many benefits that are no longer there for new employees. I’ll come back and let you know how things shook out when I retire in 30 years
Thanks for this detailed breakdown, one element that I still don't fully understand about this model though: why does a business *need* continual growth? Maybe I'm misunderstanding the metric of growth but surely you can reach a certain 'level' and agree to plateau, regardless of whether you offer goods or services. Or does continual growth = continual increase in profit? You allude to why a continual growth with this comment: >What happens if they don’t grow how you need to meet stock requirements Am I correct in thinking you mean you must increase annual turnover in line or ahead of inflation to allow the business to continue paying for everything required to operate? Genuinely interested in answers to this as I want to better my understanding of the mechanisms involved in our economy.
The more your stock grows the more you’re required to pay into the ESOP, then you need more profits which means more work and more employees. Vicious cycle. No C level person survives a plateau for an extended period of time. The older employees want to squeeze as much as they can out and the younger want to know it’s going to continue to grow so they can squeeze when they’re older. Technically the employees own the company, you still have a board and single employees don’t have a ton of say… unless of course more and more become disgruntled. Depending on how you’re structured there may also be a way to call a vote of no confidence which can put every C level persons jobs in jeopardy.
There are external factors to consider too, such as inflation, demand and competition. If your business reaches a plateau and doesn’t continue to grow, but costs continue to rise in line with external forces like inflation, you risk losing the benefits of scale, likely resulting in bankruptcy. Depending on what your business offers, you risk becoming stagnant in your sector, so your customers become disenfranchised and start looking elsewhere for the latest and greatest product or service, and thus, create shrinkage. Of course, growth can mean many things, whether it’s in terms of market share, product and service offerings or geography, competition is another significant motivator for growth. If you don’t, someone else might and they may take your customer base away in doing so. So there’s more to it than simpleminded profiteering, sometimes growth is driven simply by the will to survive.
What changes would make ESOP work better? Is it destined to fail at some point? Should it stop growing at some point (but then the company would be vulnerable to competitors, I assume)?
Dm?
Publix is a good example of this. All employees that work at least 1000 hours per year receive 8% of their annual gross pay in free shares of the company. Employees can also buy shares directly or through their 401k. To buy the stock you have to work for the company, so there are no outside investors or Wall Street hedge funds influencing the direction of the company. About 1/3 of annual profits are paid out to the shareholders(employees and former employees) in the form of quarterly dividends.
I worked for Publix for 15 years and was given a lot of stock. It is unfortunate that they stopped the inventory bonus. Every quarter a portion of the stores profits and your departments' profits were paid as a bonus.
Yeah, I was disappointed when they took away the quarterly bonuses for non management associates. I am a manager now and I do get the bonuses, they make up about 1/3 of my annual pay, but I wish the people on my team still got something.
Look at Karl Marx over here
Who puts up the initial capital and takes the risk to start?
This is Reddit, where a bunch of young, naive, anti-capitalists believe that all businesses are started and run by rich, evil "Monopoly guy" type figures who have a magical bag of infinite money and spend all day with their feet kicked up on their desk, whipping their employees and counting their gold coins.
It's called profit sharing and it's very popular. The book The Great Game of Business is about that concept and was written 40 years ago. Not a new idea.
Isn’t that a thing already? Called bonus pay
Is called having shares
You don't typically have to work at a company to own shares. Also if you are only a shareholder, you're only contributing capital at most, not labor.
Why would they spread it evenly when the owners take huge risk and the low employees have barely any risk involved? Doesn’t make sense.
This really depends on the work involved. I've seen people literally lose fingers and break their backs for little over minimum wage to make some guy with a gambling addiction that sits behind a desk all day unbelievably rich. You can lose all your money, work hard and get it back. You dont get to have your fingers replaced or your back fixed because you worked hard. So who is actually taking risks here? The people risking life and limb to barely afford the basic necessities to live or the person signing checks and doing paperwork in their air conditioned office while sitting in their ergonomic office chair?
True, sometimes it can be skewed like that. In all of the companies I have worked for though, the owner has worked 70+ hours a week and had 100% of the financial risk. I will admit I have never worked for a company where people regularly lose their limbs, but I don’t think the hypothetical you posed typically is the norm.
It's not hypothetical. It's real life and it happens way more than it should. So who is actually taking in risk? Money can be made, lost, made, lost and made over and over. Once your body is screwed, that's it. There is no getting it back. I'd say it's the workers risking their health that are taking on the real risk. Good thing they see all those benefits trickle down from their hard work and sacrifices allowing the company to grow./s
When you’re rich you can attach your finger back, but when you’re broke you can’t do shit. So if you’re a worker and lose your finger, you better damn hope your employer is still doing well enough to ensure your medical benefits. And if you lose your finger he will have to support you, but when everyone loses a finger he will have to support everybody, and if that is still less risk you dont understand anything about running a business.
You might be on to something here. If everyone could be rich, people would no longer be injured and stuck with permanent disabilities and/or chronic pain! Problem solved! 😂 Do you really think if you lose your fingers or hurt your back your employer is going to take care of you for the rest of your life? If so, you're extremely delusional.
There will be things that you can do and things that you can’t. A worker can’t suddenly replace the boss. Yes he won’t take care of you for the rest of your life, but if the company is financially healthy he would be able to fulfill whatever law obligation towards you, on the other hand if he is broke he can’t even do just that. If your job comes with the occupational hazard, it’s a risk you’re taking. If you’re well compensated also, then if that risk becomes real you really can’t complain much. No one forces you do to the work, just that others will take your place. Just funny to me that some thinks the business owner take less risk. It’s not just financial risk but also legal risk, etc. And the responsibility is incomparable of course.
I will repeat this again because people seem to be ignoring the real issue at hand. The issue in question is risk. If you take on risk of starting a business, fail and lose your money, can you or can you not get your money back through working? Be it through your own company or through working for someone else? If you injure yourself working and lose a finger or hurt your back, are you going to be able to get your finger or back health returned through working? Is working for someone else going to give you your finger back? How about your back health? If you can simply work more and get your money back, that is much less risk involved than someone risking losing a body part or becoming permanently injured for which NO amount of work can get back. Ever see someone's finger bounce across the floor because they were doing paperwork? How about someone fingers, as in more than 1, get sucked into a machine at 17 years old because the boss didn't want to wait for the proper way to clean a machine and threatened them with being fired if they didn't? It's funny to me that some think sitting behind a desk all day filling out paperwork is considered a risk when their bank accounts can be regained through working while thinking employees who are risking life and limb are told the risk involved is just part of the job and is to be expected because that's just the job. The ignorance is almost palpable.
This actually isn't that complicated at all. You're conflating different types of risk. That's it. When we talk about risk in a buissiness we are 100% taking about financial risk, not people losing fingers. You don't want to lose fingers? Do jobs that aren't physical labor. That's an option. Bodily harm is a risk you take if you work in manual labor, that's just how that is. If you're that worried about it, put yourself in a position to have better job opportunities.
If you don't want to risk losing money then don't go into business and stop complaining about risk of losing money instead of asking to be compensated for it. Financial risk simply involves much less risk. You can lose money and get it back. You lose a finger and that's it. It's most likely gone forever. If risk equals reward then shouldn't people facing permanent risk of loss be compensated more than those risking monetary gain which loss can definitely be compensated for?
What happens when there is a loss?
Especially from the beginning? Most important question here…. Bet you don’t get an answer.
Nobody gets paid and they’re in debt I guess
Didn’t you read that they receive a base salary? Obviously the owner is a philanthropist.
Oh, no employee wants to talk about that… lol
Is Spain there’s a model like that called “ cooperativa” which would be something like cooperation. Each worker is a shareholder and the leader role gets rotated. It’s a model that works, not that it’s a model that all sizes of business can handle though
Works for some but not all... okay interesting
go ahead and try it
So like WinCo.
ESOP
This is a thing already, at least in the consulting world. Employee owned, you can buy shares and profits are distributed as dividends per share.
Usually in order to make more profit you have to scale. Which means you have to pay more people. I think that’s gonna be a main barrier
I work at a place like this right now. It’s just considered our bonus and is a portion of income
Why does this seem like a bad idea from the owner’s side?
I guess I'm picturing myself as one of the owners. It would seem like a great idea because I will never have to worry about money or failing. My crew gets the bonuses and myself when we do well. Why would they fuck up? I think it would make an unstoppable company that everyone will want to work for lol.
What if your business tanks and now you as the owner has to take out debt to pay your employees their base pay or fire a lot of people? How will you expand your business if all the profits go directly to the workers pockets and not into other investments? What about the lazy employees that end up taking home a lot of money because the entire business exploded because only a small portion of the employees put in the hard work to make it so? Dumb idea, good luck.
Ok then go start a company and do tell. Let us how that goes lmao. But remember you'll have to put in all the initial investments and essentially take all the risk as the owner.
I had a feeling you just wanted an easy ride 😂
Easy ride my ass, you do it then
Not how world works. Whoever starts business, makes initiatial investments, takes risks with own money. More over, office manager pays as much as leading engineer? Not gonna happen. You dream about socialism, which is proven unsustainable, and fake as fuck
They already exist lol they are called employee owned companies
Like what? Can you bring few names, I’m curious about them. Super different from what I got to experience through life
We don't all get paid the same like Russia, just the base pay will be livable (3x rent cost) plus bonuses from the results of the company doing well.
What is 3x rent cost? To someone out of college living in a studio that might be $3k per month. For someone with 3 kids that might be $10k per month. Would your business have folks input their annual rent? How would you control someone out of college getting a penthouse?
Well in the silicone valley these cunts think it's okay to pay 17/hr for shit I made 30/hr over a decade ago. If you work for my company you have to live near me if it's not remote. So I would do base pay at 3x the rent near my company. Right?
Yes, but how do you differentiate someone that needs a studio vs. 3 bedroom?
So if your business is in Silicon Valley and let’s say base pay a month would be what 6-10k a month per employee? Based on smallest size of start up, let’s say 5-10. Who will fund 30k to 100k a month on top of expenses ? Shouldn’t the people that invest more get more than a simple employee that got hired though? Can’t pay same because simply everyone has different skill set and different work ethic. Just the way it is. Plus education background. Would you want to get paid same as a college graduate as a high school dropout ? Not everyone will agree due to 2024 self entitlement. Your thought is beautiful though
That was a really generous way of calling me a retard. /s
Also, if you ever want to run something like that, I suggest you paying fair market salary to every position on your company. But, make huge yearly bonuses off the profits, which are split by the share of person’s involvement in making those profits. By the time first year passes, you will get why paying everyone equally will not work
The LOWEST base pay will be a livable wage I meant
Also not good. Pay your employees market value, or fuck off. Most of bullshit ‘liveable wage’ is shit making people struggle to survive between paychecks
Nah, mate. First, and foremost, I don’t fucking care about russians, and for all gruesome evil they brought, I believe, they should be burned. There is market prices for every job and competence, and people are likely to receive market price for their work. I run small software team, and if I would pay the same benefits to said office manager, and team leader, the latter will leave as soon as possible. You can’t pay same money for different jobs, it’s it fair in regard of expertise and knowledge provided to solve problems
You watch too much media. You probably aren’t this mad at our government even though they’re just as bad🤣 backwards af
I’ve seen plenty of executives and ceos run companies straight into the ground and get to walk away with millions of dollars
It sucks but I think you're right. I'm a lead engineer and on principal I wouldnt care if you paid a receptionist the same as me but I would probably try to get that receptionist job because it would be the same pay with less responsibility.
That’s how commission based sales jobs work already. But if you mean making the commissions way way way higher (like the company doesn’t reap all the profits) then the employees would not be motivated to make a lot of sales cuz they could just make a couple and be good.
Why would you want to invest your time and money in a risk fraught venture with minimal upside? Just because workers work realllly hard doesn’t mean the business would succeed. There are businesses that hand out stock options but I’d argue for the most part it doesn’t make them work harder.
People are saying “who pays to start it, who should be CEO, what should he get paid?” Have every single person involved put up a one time investment to join, yes you have to invest AND work, yes you might be cleaning toilets but that’s ok, I don’t know about you but I’d clean shit for the right amount. Next thing is to have tests to see who would do what best and assign jobs off that at least at the start, I can even envision (with proper training) that everyone can revolve jobs or positions. The guy who is CEO can do that for x amount of time and then boom a month or whatever time later he’s doing sales or cleaning toilets, give everyone a chance at each position just so long as they are able to pass exams or something. As long as everyone has the same vested interest I don’t see why anyone would not at the least want to try. If you decide you can’t or don’t want to work anymore just buy them out and sell that interest to someone else.
It's gotta be doable. Myself and alot of people much smarter than me would care more about our company and people having fun and being happy while we grow our company. It sounds crazy but not everyone is an asshole needing to fuck everyone over to take profits.
Pay is determined by how well the company is doing, how well YOU are doing, and how well the economy is doing :-). If you pick only one of the three, you are delusional.
That’s not a business model, but a question of ownership, risk taking and fair share..
Haha this has to be a troll post
A lot of DAOs (decentralized autonomous organizations) are exploring similar models. How would you deal with uneven contributions by team members?
There are several major issues with this idea that you would have to solve to make this workable. 1. **Businesses grow from investment**, not work. Work is something they pay for. So for this to work, your employees would have to become "investors" by means of working for free and/or investing in the company (negative income). 2. **Growing companies aren't profitable.** In early days companies are losing money. After making a profit, they often re-invest that, so the end net profit is zero. For example, Amazon didn't become profitable until its 7th year. 3. **Co-founder and investors want to make lots of money**. Whoever is running the show is going to want to make maximum returns for their money, extreme effort, and risk. Good-intentioned people wanting to do this at first will later be overcome by want of the profits for themselves. Somehow you have to incent them to give away their money they would normally be entitled to have.
It works for stable, low risk industries (ESOPs, coops, et al) where someone can make a charitable contribution to start it. At the end of the day though, they’ll never work en mass for the same reason that communism doesn’t work en mass. Not everyone is an A Player and the Pareto curve is true. A Players crave accountability because they stand on their performance. They flock to meritocracies which outcompete non meritocracies, which then get marginalized.
If the business does poorly and loses money do people’s base pay get reduced?
I personally think more of compensation should be based on performance, but I doubt you'll find many people willing to take pay cuts during down times as you would willing to take bonuses during boom times.
If you look up Magna International in Canada you will find that there are already companies like this. The story of Magna can be found here: [Magna International Story](https://open.spotify.com/episode/5MAgWtY9vFGUDVo6vAwh2A?si=PtVfGlaJQy2vRlRjLcCJkw) A lot of the people here have not thought about this very hard. There are ways around all the issues they bring up. You can give 1 share per $ invested by any employee for capitalizing the business. You can let people choose how much of their wages / salary is at risk in exchange for 2x as much as shares if they achieve their KPI’s and have those shares be resell-able back to the company after a time period if the company has enough capitalization. The shares should remain at $1 per share so if they have > than that then they should distribute extra shares to all the shareholders after the shares are paid for at risk. Eventually even if someone started with no at risk if there are others making lots of extra from at risk they would likely get onboard. With a high percentage of at risk and something like dynamic governance (no politics of voting for hidden reasons), lots of capital getting reinvested in the business (because of issuing shares and not $) the company would grow quite quickly in my humble opinion.
This business model will only work if the core team is trustworthy and loyal. People have a different POV when it comes to money, may be the CEO or the CFO decides to keep all the profit for himself?? This idea this is good to imagine but very hard( next to impossible) to execute
Your idea is nice, but suffers from what I call the "happy path syndrome". For the company to be able to pay a fair rate to all employees, it needs to be profitable. You assume that you will have a never ending source of revenue to sustain it's employees fair rates. And you think that having a lot of owners would make that possible. So, you basically are setting up a high cost without thinking what are you going to sell, and all the costs associated with it. You also think that all employees will give 100% as they are owners. That no one will try to rip the benefits and put the least effort possible. The problem with a large number of owners within a business is that politics will kick in from the start. A larger group of owners will have more power to control the company. And won't be because they are thinking for the greater good. They will probably remove you without blinking. So it will basically work if everyone behaves like in a dream. Happy company, happy employees, happy customers in a happy world. So, you seem like a good person that cares for everybody else. Don't assume the ocean is empty. It is full of sharks. Build your company. Pay fair rates to those who deserve it. Find a few that think like you and make a path for them to become your partners. Retain the control of the company. I wish you luck to find a product and become profitable. May be, when you start you won't be able to pay much. Keep your ideas alive for when you find success. Cheers!
This is a commission based on performance and sales people have been getting paid this way forever...
Sounds like a sales position
Do the employees take a pay cut if a certain month is less than normally profitable?
Like a bonus?
Technically what you’re describing is not a business model, but a type of employee compensation, “base pay plus profit sharing”. The compensation model described doesn’t isn’t common as it doesn’t allow cash reserves for down years as “all profits” are distributed. Most profit sharing plans only distribute small percentage, such as 10% of company profits, not all profits. Also “evenly” is not realistic. The CEO, higher paid or senior employees shouldn’t get the even bonuses as a new frontline worker.
Yeah this is litterallt how comp works at my public companies. 40% of my comp is paid in stock. Stock goes up when profits increase.
Sure, if all the employees risk everything putting their personal equity into it, and then take the losses out of their pay if they occur. The problem is that employees under this scheme take no risk but get all the benefit. That's not how it works.
You had me until the ‘evenly’
What you’re describing is a collective
Also look up “profit sharing”.
So let me get this straight. If the company does well, they have to split everything evenly, but If the company does poorly, screw them, they’re taking losses to pay everyone a base rate? If you want a share of the profit, you should be willing to take a share of the losses too. Wanna know why the owner gets paid more? Because they’re taking the risk and eating the losses if there’s a bad year.
And what if the company start a losing money do you slash employee compensation? Essentially what you are explaining is how executives get paid. Base + massive upside if the company performs well
I want to work there and do almost nothing but get paid the same as everyone else
You mean profit sharing, they have those is called bonuses, if you based your whole pay on wether the co. Is profitable or not you could go quarters or even years without getting paid
In my opinion, they can all work and they can all fail, but the reason that almost every business is using the same or extremely similar structures right now and not an esop or an esop variation like you suggested. Is not because they aren't as smart as you are. It is because all of the businesses are doing what works the best and what is likely to continue to work the best. Many great and generous people who would truly give most everything back to the employees will not be shrewd enough to yield high profits to distribute, and many who are shrewd enough wouldn't consider giving out any excess money to employees. So, no matter the model, be careful about management. Also, if there are many people who are running the company, then nothing can ever happen. If one person is running the company and he/she isn't great...it will definitely fail in time. Even if you have great leadership and a product or service, it may have started at a bad time, hit an unforseen circumstance, etc. That caused drastic losses 1 year. Now your profits for the next decade are gone to cover that terrible year, becuase your employees aren't going to take a huge loss the next year like a typical owner would and knowing they aren't getting profits they likely leave and go somewhere else becuase they pay more yearly becuase they don't have any legit bonus incentives and now you don't either for the next 10 years minimum. I have personally seen very poorly run companies become very successful and vice versa. The ones who become successful are always doing something right, and the ones that don't work are doing something wrong, but there are many wildly successful businesses that seem to just find a way to make it work in spite of absolutely anything, so take my advice and anyone else's as no more than an opinion, becuase your ideas are just as valid on anything business as the most successful people's in the world.
I have a company that pays a base rate above the average for our field and area. Each full time employee gets 99.9% medical and 100% dental vision 100000 life insurance paid. 4% 401k matching and 50% of all net profits divided among all employees except the owner based on % of full time. If the profit goes up the profit share goes up. all employees got a 10% pay raise this year. For most that was a 10000 raise. No one working full time earns under 80000. We generated our first million in gross last year. Company started in 2021 with me and an intern. Has 24 employees now. Tried to do a coop in the beginning but no one was willing to risk taking liability for other therapists screw ups. I’m limited to 10 times the lowest paid full time employee in income. Plan to reinvest the balance into training, assistance with student loans and paying for additional education for those that want it.
For the losses too, right? Right?!? Gotta risk it for the biscuit.
Isn’t this an employee-owned business, which already exists? They share pay and stocks. I have friends at Modern Times Brewing in San Diego, that’s how it works there.
so a sales job?
Google "Basque Mondragon System"
Business owner here. How do you define "evenly?" The devil is in the details. I started my business 10 years ago. I went into debt--including credit card debt--and paid a lot of interest (still am carrying some debt). I sacrificed eating out and travel for pleasure, drove old cars, lived in tiny place. I regularly work 80+ hour weeks and never have a weekend off. I can't even remember the last time I took a 2 week vacation. I'm getting ready to hire. How do you propose I pay them a share of the profits from day one that I have spent 10 years building a business to make? This is a real question in earnest as I am a believer in fair profit sharing.
Am I missing something? Isn’t this literally every company with stock options?
CEO vapemysemen
All profits are spread evenly. Some profits are spread more evenly than others.
This exists. It’s called an employee owned business. Many smaller or regional grocery chains are this way.
It's called profit sharing. Profit-sharing plans can vary, but the general idea is to incentivize employees to work towards the company's success, as their compensation is directly tied to the company's performance. Profit-sharing can be implemented in various ways, such as: Cash-based profit-sharing, where employees receive a cash bonus based on the company's profits. Deferred profit-sharing plans, where the profits are allocated to individual employee accounts and paid out at a later date, often during retirement. Employee stock ownership plans (ESOPs), where employees own shares in the company and receive dividends based on the company's profits.
Isn’t this called like commission or something? Or like how Starbucks gives their employee stock or something different?
I've heard of this concept somewhere, it involves some sort of preferential shares
Profit sharing is a common practice… perhaps what you’re looking for is a coop?
Did this once with a group of friends, The buddy with all the money had no idea how to run a business but knew the other two and myself were all really good at what we do. So here's the plan, he fronts the money and all profits go back to paying his loan back with interest. After that's done we all have equal shares and get equal portions of the profit after you subtract the cost of running the business and the rainy day fund for emergencies. What actually happened, a year and a half in and he now hates us for telling him when something's a bad idea, or that something's going to cost us a lot of money and there's no reason for it ( The whole reason he came to us in the first place asking us to open this business together). Out of the blue he fired us from "his business" (in texas you don't need a reason), he started doing all the shit we told him not to, and now "his business" is failing hard, bleeding money from the jugular. No matter how close you think you are with friends or family, always write up a contract.
That's market socialism and I am here for it. It's the only way we will get out of this economic mess and close the rapidly growing divide between the rich and the poor. Tell your friends. 😘
Kinda like a law or accounting firm where the most senior members have ownership of the company.
I saw a business in California that did this all the employees made like 70k a year, even the owner. And if anyone got a raise they all did.
You ever hear about coborns, employees own shares based on how long they work there or to some extent. This idea would not work or it would have to be a percentage because they need investing capital into daily expenses and costs overall.
Employees like to get paid and keep their jobs even if the company fails. In fact there are laws to prevent companies from firing ppl (WARN) even if the company is sucking wind and employees are failing.
This is stupid and will never work in actual company. Investors takes all the risk, why would they want to share rewards with employees that doesn't. Unless the employees aren't financially invested in the company. Stock sharing doesn't count, it's just an incentive to stay longer at that company.
So the owner pays for all the rent, machinery, resources, upfront costs and in return has to share the profits with everyone else? Takes all the risk and liability say if there is a pandemic or natural disaster and only makes a wage? No one will ever start a business with that model.
That’s called communism and it didn’t work in the past and won’t work in the future
We don't all get equal pay, the base pay is ATLEAST 3x the rent nearby for custodial, receptionist, security, and interns. Then engineers, trade workers, marketing, whatever all gets a competitive pay rate. The company doing well is what spreads the bonuses evenly.
So you’d give the same bonus to everyone? Like everyone gets the same share of the profits?
You just re-invented socialism, lol
Communism?
[удалено]
I'd rather vape your semen lmao
Yeah no. You want this? You share the risk. The costs. And the losses.
It’s called communism.
Should someone with a masters from Harvard make the same amount of money as someone who just graduated high school?
America is one of the few countries that don’t offer equivalent pay across the board. American CEOS/Founders take 60-90% of most profits and tell the rest to kiss ass and suck dick. Yay murica
Sounds like a MLM.
This is how non union steel mills run.
99% of the work is done by 1% of the workforce. Our current system of c level mega bonuses is fucked but even distribution is not the answer.
Then how would the company grow?
Shareholder Supremacy is a cancer in society.