Ok , this goes with the other question about pay and benefits
I dont know , maybe its spring
my lead guy, with me now for 5 years, said, there has got to be something more in this for me
his wife, hinted to my wife, he is wanting a partnership, or something more then a pay check, yet I know he does not want to take the hits of a bad year,
Im not ready for a partner, yet I would not be where I am today, without him, and lately , he has actually had better paychecks then me, so its not money , really
but if you had a friend/employee ( was an employee first then friend) what would you do ,
and how compli9cated is it to do profit sharing ??????
Replies
Most want to be a partner during the good times but a salary man during the tough times.
Most also thinks the boss is making money off of their labor and therefore must be making more than them.
People who think this way will be lousey partners.
Getting the 411 from a spouse to spouse relationship is a poor way to establish a relationship - partnership or otherwise.
You need to have a sit-down with this guy to find out what he really wants. I don't know how you would have a conversation about him being a partner without disclosing how poorly YOU are doing - relative. Personaly, I would not open my books to someone who is coming to the table with a "What's in it for me" attitude.
We all have had emplyees who are/ were "indispensable". Sure, this guy helped you in ways you never may have imagined. That was his job. Guess what else. You paid him for his efforts even though it meant that you went home with less. That was your job.
It is YOUR company. Therefore you get to decide IF you need/ want a partner and WHO that partner will be.
Also, it is customary that people buy into a partnership. The amount is based on what % you are offering.
Every employee relationship has a course. Some are straighter, some are shorter, some are closer. But none are forever. We may want them to be, but at some point the balance of the relationship is uneven and can't/ won't be centered again.
It doesn't sound like he (or his wife) has the temperment for risk. Consider offering profit sharing. That way it won't cost you a thing unless everybody wins.
Frankie
There he goes—one of God's own prototypes—a high powered mutant of some kind never even considered for mass production. Too weird to live and too rare to die.
—Hunter S. Thompson
from Fear And Loathing In Las Vegas
Granted you have a good worker... it seems you pay him well... and I'm just guessing he always got paid for working...
You started your company.... you had risks... you had sleepless nights... you invested in the things it took to get started with no promise of profits.... you not only do the work... you do taxes paperwork sales calls ect... ( just guessing) and I'm guessing you didn't always get paid....
now things are going better... and the one who never took a risk, never missed a paycheck, never had the worry, the paperwork, the sleepless nights... wants part of your deal... I don't know how much there is but I bet he sees what he's make'n and thinks you are make'n 5x that...
I've had partners... great partners best you could ask for... but at the end of the day i did more risked more and always took less just so there'd never be a question... and i hate answer'n questions...
MY advice is to do what you'll hate to do... encourage your guy to go out on his own do his own thing ect... be willing to help.... sub jobs out to him ect... everyone wants security and there is no blame in that but not everyone can or even wants the problems that go with being "your own boss"... people do outgrow situations and you have to let em move on...
my guess is... it's not the guy but the wife behind all this... and you don't want to even go there...
good luck
p
Frankie nailed it in my opinion. But I will add that I think it is a mistake to socialize a great deal with an employee. My brother works for me. Best employee I have ever had (out of about 150). Other than the occasional family B-day gathering or Christmas we rarely see each other outside of work. I just think it is better that way in the long run. The others that work for me almost never see me outside of work.
I pay my help well. But I think anytime you fold to the "I deserve more" veiled threat you are starting a never ending trend. Money is a lousy motivator but a great reward. If you feel you have to give him something set up a bonus plan based on objectives that he can control and that work only when the job goes really well and is really profitable. That way you are only paying extra when you can afford to. DanT
"yet I know he does not want to take the hits of a bad year"
wow ... all reward and no risk? Sign me up too!
I want in.
I'd tell him yeah, I want the same thing ... and I'll let ya know if I ever find it.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Isa,
You've gotten some good advice so far and I'm sure more is to come- a topic like this easily grows legs...
But I would like to hit on one point.
his wife, hinted to my wife, he is wanting a partnership, or something more then a pay check, yet I know he does not want to take the hits of a bad year,
If, at the outset, your potential partner cannot even come directly to you and discuss the options for both of you, I would stop right there.
Forthright communication is ESSENTIAL to a successful partnership, that's one of my biggest challenges being in a similar situation myself (I have an equal partner in an S corp).
But maybe I'm majoring on the minors...
Jon Blakemore
RappahannockINC.com Fredericksburg, VA
There are several old sayings that come to mind on the subject of business partners:
Choose a business partner more carefully than you'd choose a wife.
Only take on a partner for something that you can't hire.
Keep it small, and keep it all.
"partnership is the leakiest ship afloat} quote by a unknowan
always remember if the guy died in a car crash last night what would you have to do to replace him . This is a quote from a Dale Carnagie management course on how to deal with a a employee you dont want to lose but they have issues.
i learned it 30 years ago and never forgot it.
On the surface, profit sharing sounds like a good thing. But when you say "he's been making more than I lately", that sounds an alarm.
If you paid yourself the same, there wouldn't be any profit to share. So the profit sharing program would pay zero and cause bitterness. They'd think you were lying.
Your business sounds like it needs and overhaul and adding that parnter might not be the answer.
I'm not against partners. I'm involved in several different partnership relationships right now and I'm fine with all of them.
I have to laugh though about having a partner in the framing business. When Frank decided that he would climb into bed with me, he took a pay cut that he's never recovered. I always laugh at him about that. I knew going into it that he would take the hit and I told him that he would. He did and is trying to fix that now and it's hard. You sound like you are in the same situation. So, if you want to lower your payroll, take him on as a partner! LOL!
blue
Ask him what details, risks and other issues he thinks a business owner needs to deal with. Does he want to be a worker and partner or does he want to cut back on the labor part? Does he understand that not every $ of per-job profit goes into your pocket? Has he been watching late night infomercials about how people get-rich-quick? Is his wife planting a bug in his ear to make more money or achieve higher status by becoming a partner in a construction company? Does he know that he's been making more than you? If he is made partner and has never been involved in day-to-day operations of this or any other business, what happens to the company if something happens to you?
What more is he willing to do for the company if he becomes a partner?
If he's been a good employee, has had a big hand in making the business grow and you want to hang on to him, in some ways it's only fair that you share some of the $$$. But don't share control. Big difference.
Sounds like all he really wants is a share of the $$$ anyway.
"Let's get crack-a-lackin" --- Adam Carolla
Isa... are you considerably older than him ?
i mean .. as you decide you want ot wind the thing down , can he start ramping up ?..
if so...
you could discuss a long term buy-out .. incorporate and hold 100% of the stock
after a year of his partner -in-training you could reward his with 5% of the stock
and so on for the next 10 years until you have a full partner
you would have to have a lawyer set up buy-sell agreements, key-man insurance and various other things to protect the company and yourself
me... i think finding a good partner is harder than finding a good wife
the thing about a wife is you both wind up with mutual intersts .. what is good for you is good for your wife.. and vice versa.. but this is not true with a partner.. you partner has to answer to their family.. the needs of their wife.. their kids..
the thing that might make this work is if your prospective partner is really going to add value tothe company... can he take over some of the hats to leave you free to concentrate on other areas..
think about the benefits of having a partner.. the company has two principals instead of one.. you can take a vacation while he runs things and vice versa... you can double your networking..
all of this is true if he's the right guy... if he 's not the right guy, then you are going to waste a lot of time and effort trying to make a silk purse out of a sow's ear...Mike Smith Rhode Island : Design / Build / Repair / Restore
lots of good ideas, and I agree with a lot of it
and one question,kind of , about age
I am in my mid 50's, he is in his late 20's. when I burn out, he'll still be going strong
he can keep the energy going the work load going
none of my family want to do anything with the bussiness, they both pounded enough nails for them in their youth.
so I see this , somehow, as also my retirement, which I have none. to be able to sell the biz, or have a major hand and income in it until I die.
So the idea, about letting him buy into it , like 5% a year sounds interseting
I like that idea too Isamemon. I used a variation of it myself when I partnered up with Frank.
Frank and I were of the same age as you and your potential helper. I decided to partner up so I could dump some hats. That has worked out splendidly. Now, he's wearing almost all the hats and I screw off. Our business model would be working as good as it did ten years ago, if the other cirmcumstances (econoomy, labor rates, frame rates, expenses) were the same.
Youngblood are definitely more ambitious. They don't really know how to get a lot of stuff done, or they might go about it wrong but I'm there to pick up the pieces or right the ship.
5% per year sounds right. Get a lawyer and include a non-compete clause should he decide that he doesn't like being a partner and getting a pay cut for doing more.
blue
I'm nobody to give advice on partnerships or for that matter, business!
But, with all the advice given so far I'm left wondering what he brings to the table? Yes he's a good employee but can he bring in more work? Or is that still going to be your deal?
I had a guy working for me way back when I did my regular thing but also added a lot of roof work to fill in the voids between cabinet/remodel work.
The guy wanted to be partners not just an hourly guy, he thought I was raking the dough in. He had nothing, not even a ladder! I couldn't see where he had anything to offer other then his labor.
He got mad and went off on his own, came to me and wanted to barrow a potato fork and a ladder! It was too funny. I gave him a broken fork and told him he could keep that but he'd have to go buy his ladders just like I did, welcome to the big times!
Doug
doug... after he got to the big times, how did he make out ?
would you like to have him back now that he knows the ropes ?
me, i've got a great business.. but sooner, rather than later.. one day i will close the doors.. and stop..
what a shame.. after i finally figured out how to make money and get interesting work.. it's all going to end
with a younger partner, it doesn't have to end.. it could go on and on and on....
almost like a real business....Mike Smith Rhode Island : Design / Build / Repair / Restore
Mike
how did he make out
He didnt! He tried to be a roofer without insurance. Man the last I heard he had a roof tore off and along came the rain. Ruined the ceilings in the upstairs of the house, some damage to the floors as well. They just walked away from it. He didnt have anything to go after, with any luck the HO's insurance took care of it.
I talked to his son that worked with him, they were sinking faster then the Titanic.
He was a damn good roofer but he had no buisness being in buisness!
Almost like a real buisness!
Maybe you could talk that young Buck into moving to RI and taking over for ya! If nothing else, it'd be fun.
Doug
Mike, you were going along good till you said "the thing about a wife is you both wind up with mutual intersts .. what is good for you is good for your wife.. and vice versa.. but this is not true with a partner.. you partner has to answer to their family.. the needs of their wife.. their kids"
I understand your sentiment and concern, but when you give it a little more thought, you'll soon see that both partners are seeking the same thing. Each are looking out for the family and should be looking out for the other's family. Those same thoughts apply to the other employees.
blue
blue .. my point about the wife ..
it's basically you and her against the world ( when it's working right )
with a partner.. it's still the partner and his wife against the world.. if their interests and your interests are in sync, it's fine..
but the partner's first priority will generally be to his family..
and the wife further complicates the picture because she can become the silent partner.
she may have a tremendous influence over him in terms of the business partnership .. or she may be a laissez-faire personality and keep her nose out of it
Mike Smith Rhode Island : Design / Build / Repair / Restore
Isa, I've had a partner, I've had stock options (that went "under water" about 18 months after I got them) and I'm close to getting "phantom stock" in a company. There's obviously pros and cons for both the person giving something up as well as the person (potentially) gaining something. You've already received some good advice in this forum. My only additional comment would be to read the books written by JACK STACK. I recall his first one was titled something like "The Great Game Of Business". Basically he encourages companies to practice open book management and then let employees share in the financial gain that takes place. Of course key employees gain more than non-key employees. That's something that you might want to take a look at.
Aside from that I would a) have a heart-to-heart w/this employee, and b) give him some real life examples of some of the "bad times" that he might expect to encounter if he becomes a partner. When my boss told me some of the horror stories of his early years it made me realize that I really didn't want to go through the pain of what he had; and I didn't want my wife and kids to endure that pain either. So I'm happy w/the phantom stock arrangement until/unless I get up the gumption to venture out on my own. But he and I have had several serious chats about this and we both know what the plan is. Best of luck to you.
- Rob
Ill have to look into that book, or others by him
Lots of good advice, lots to think about and discuss with others