Does employee engagement get a boost from profit-sharing plans? Sixty-three percent of the respondents (63%) to a recent Women In Optometry Pop-up Poll thought it would. The second most common reason was also related to staffing; 54% of respondents said that they implemented such a plan to help with employee recruitment and retention.
Nearly 46% said that a profit-sharing plan can contribute to financial growth of the business. Others wrote in that they implemented such a plan to help with their own personal retirement planning or simply that it’s fun.
Note that a slim majority of respondents–54%-do not have a profit-sharing option in their practice or business. Most of the respondents (82%) were in private, unaffiliated practices, and a similar percentage were directly involved in profit-sharing and other financial decisions.
WO does not provide financial advice in this column. There are requirements and criteria for approval profit-sharing plans and who must be allowed to participate. For example, according to the IRS website, a profit-sharing plan should include all full-time employees but can exclude employees who work less than 1,000 hours per year or employees who are under age 21. Preapproved plans are available at many financial institutions and through plan professionals.
One respondent noted that “the downside is that every eligible employee must receive the same percentage, so it can be quite costly for large practice where the owning OD is a relatively small portion of W2 payroll. It’s also somewhat ‘hidden’ from employees as the profit share contribution is done at years end and doesn’t show on payroll.”
- This doctor and others noted that there are other ways to achieve that sense of ownership and buy-in that are simpler, administratively.
- I’ve found better response to having a 401k with generous employer matching, which is highly visible to employees
- Employees earn a bonus of $100 if we gross $100k per month.
The Great Game can be a great motivational tool to get employee engagement and increases customer service. Imagine what kind of service your patients would receive if all your employees treated them as if they owned the business.
The advantage to creating some kind of system of financial rewards or creating more transparent communications around practice profitability was illustrated by one respondent who wrote, “Some OD private practice owners are earning money hand over fist but won’t ‘pay it back’ (or forward), even to their colleague employees who are generating the income.”
Has your employee engagement or financial performance increased as a result of some plan for financial incentives?
Read the results from other WO Pop-up Polls here.