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Payout
Tenure
Performance
Total
Percentage
Payout
Lloyd
1
2
3
38%
$375.00
Sally
1
2
3
38%
$375.00
Dale
2
0
2
25%
$250.00
James
0
0
0
0%
$0.00
Totals
8
100%
$1,000.00
Tenure Points
Tenure —>
<1 Year
1
2-4 Years
5-10 Years
10 Years +
Tenure Points
0
1
2
3
4
Performance Points
Salary Increase —>
3%
4%
5%
Performance Points
0
1
2
Pool Size Calculator
Profi t
Employees
Leadership Team
Percentage Selector
$10,000
10.00%
10.00%
Resulting Cash Pool Size
$1,000
$1,000
Leadership Team Count
5
Leadership Team Payout Per Person
$200
Legend for Employee Variables
Notes:
1.
I chose to make our profi t pool 10
%
, but you can do whatever you like!
2.
You may not have a leadership team, or based on your existing salaries, you may not want to include the
leadership team as a separate pool, but we do. Why? Having one pool for everyone
complicates the weights
of the calculations. So I determined the simplest way too include leaders is to provide them with a separate
pool that is equally divided.
3.
Tenure Points: You can pick ranges that make sense to you. We decided to not include fi rst-year employees
as a way to incentivize and reward tenure. After-all a fi rst-year usually doesn’t have enough time to make a
meaningful impact on profi t.
4.
Performance Points: We use our separate annual review process to determine this number. For example, if
an employee earns a 4
%
raise this year, we equate that to 1 point toward the profi t sharing. You may choose
to extend this to lesser raises, but again, we want the profi t sharing program to incentivize excellence.
5.
Actually paying out cash: We set the expectations that this bonus is paid out in Q1 of the following year. This
allows us to ensure year-end books are wrapped properly, and we have ample time to guarantee the cash.
6.
Please consult with your tax accountant before making guarantees to your team. Hopefully this sheet will
help you build your profi t sharing plan.
Feel free to ping me with any questions, comments, or improvements!
✌
️
+
🖤
me@lucasacosta.com