The Right Way To Share Profits
Andersen Corp. (window makers) is a well-known employer up here in the Twin Cities whose business has slowed down greatly with the housing slow down. Nonetheless, the company is still issuing profit sharing checks for all of its eligible employees (22% of their salaries!). The part that caught my eye:
Andersen announced in early December that it was cutting 400 manufacturing positions at its Bayport plant and an additional 40 at a plant in Menomonie, Wis. The company cited a dramatic downturn in housing construction as the reason for the job eliminations. Those workers’ last day on the job was Jan. 2.
In that same December announcement, Andersen officials said that the employees losing their jobs would still get their profit-sharing checks for 2006.
Good for Andersen – that is the right way to do it. Unfortunately, I think there are many companies that would not be so exemplary in their approach.
I’m reminded of a different example. A salesperson friend of mine worked for a family-owned and run company for 8 years with a profit-sharing plan. Despite increasing revenue in those years, the non-family employees only received a single, small profit-sharing check one year out of the 8 he worked there. Strangely, each improving year saw increased expenses . . . expenses that were never explained nor revealed to the employees.
Posted By Derrick Moe | Compensation | | 
Comments(2)
The ‘contract’ with employees is paramount – from an employee perspective, the variable pay opportunity is just as (if not more) important as the base salary. It represents more than compensation, it’s a symbol of the company’s trustworthiness.
Andersen did the right thing by taking care of those departing employees (they had earned that extra comp) and in the process, reinforced their commitment to those who are still employed. Expected results? Employee loyalty (far more valuable than merely ‘satisfaction’) and institutionalizing of a brand attribute that helps customers select Andersen over their competitors.
Eric,
I couldn’t agree more with you. Andersen’s business is slowing down and they had a layoff. This move by the management team will stabilize a culture that could be fragile in the short-term. It is difficult to put a price on employee loyalty, but I am sure it is far more valuable than a 22% profit-sharing check.