A few weeks back I was honored to speak at the Kentucky Expo / Equip.
It was a great show, seeing so many cutting edge technologies coming to market.
I gave two presentations (to standing room only). One was on Open Book Management.
To add some spice to my presentation, I included a case study from the highly successful Whispering Pines Landscape (“WPL”) in Ontario, owned by my good friend and client, Greg Wildeboer.
When he and I started collaborating together in Dec 2015, he was under $4M, with a need to greatly improve cash flow and remove himself from the center of everything.
He dreamt of implementing an effective profit sharing. (He had one in place, but it was not working great.)
A PROFIT SHARING CASE STUDY:
We proved that for Profit Sharing to be effective, you need “two shares”
- Gains: a fair and motivating way to share the financial gains.
- Numbers: a simple way to open the books and share the numbers.
At “WPL”, it took a few years to get everything in place and show profit gains.
- 2017 – 4.9% Profit
- 2018 – 5.4%
- 2019 – 7.75%
- 2020 – 11.3%
- 2021 – 14.3%
- 2022 – 16.2%
- 2023 – Forecast 16.5% – a huge success given the challenges of the current economy.
In Greg’s words:
“It took a few years to get traction. One challenge was to remove staff that were not aligned with the company’s direction and didn’t want to change to the new culture.”
“On a positive note, even with the softening of the economy in 2023 we are holding strong and finding ways to improve efficiency and the client experience.”
Greg leading his team on monthly open book sharing.
He’s a quiet leader that keeps his team’s attention!
Five Keys to Profit Sharing Success:
Here are some lessons that WPL applied while implementing this plan:
- Consistency: Greg began his monthly ‘Financial Update Meetings’ in May 2016 and has delivered monthly and year-to-date metrics consistently for over 7 years.
- Focus on key numbers: Greg provides a constant snapshot of the company’s financial health by comparing budgeted vs. actual of sales, expenses, and net profit.
- Divisional Updates: They separate KPIs into four divisional categories: Snow removal, Landscape construction, Grounds maintenance, and Gardening services.
- Monthly updates: Every month they look at divisional budgets, and year over year results. They also share a five-year trend.
- Reachable goals: At WPL, they set a conservative budget, so that its likely to hit the minimum goals required for sharing in the gains.
You will have a higher chance of long-term success when your teams can meet/beat their goals and develop a “habit of winning”.
What’s In It For Me?
Every month Greg and his team discuss how the profit pool has grown (or not.)
This year (as of September) their pool was valued at more than 150,000 They anticipate a profit share of more than 200,000 by year’s end.
Your Challenge: Develop a Company-Wide Ownership Mentality
You have all read that, “What gets measured gets managed.” Greg takes it a step further, “What gets shared gets owned.”
Walk before you run: Many incentive programs backfire when the owner rushes towards implementation. “Fire first and aim later” does not work well here.
Start slow, get help and do things right.
We worked on Greg’s program together for a few years, and now it has taken on a productive life of its own.
Even conservatives can do this.
Greg is a conservative entrepreneur, keeping a steady hand at turning the ship.
And yet by not giving up, he has grown from just under 4M to almost 10M this year, while building a leadership team to run the business and take him to $20M and beyond.
Hard work, surrounded by the right experts and peer group, and you too can achieve your dreams.
Regards, Jeffrey Scott!
Note: Greg is a long time member of our Leader’s Edge Peer Group, where many companies are on this same journey together. Reach out and see if this group is right for you.