I plan to start a project of something "innovative". And among some of the parts of the project that I'm thinking about, it's in the term of how money (profits) should be distributed.

The truth is, I personally am not a connoisseur of finance and economics at the level I desire. That's why I go to this platform.

In a nutshell, my idea is this:

Of all the capital (income) that the company receives for the sale of its products (suppose it is "coffee"), I want 30% for the company, 40% for research and development terms (in favor of improve the product and everything related to it and its services), and the remaining 30%, that is distributed among absolutely ALL those involved, from the people who collect the coffee beans (even if they are located in other latitudes, make them receive their retribution proportional), an employee like the one who is dedicated to the services of cleaning and maintenance, up to the highest positions or positions. All proportionally and depending on the value that is contributed to the company, as if each employee (no matter how small the position), was their own company.

As if each one was a shareholder of the company.

The questions are: Does this type of model exist? and more specifically, what would be the best financial model to proportionally distribute the company's income to all employees, also according to the value they contribute?

Thank you for reading.

  • Umm, you might want to make distributions to those in other latitudes. Retribution wouldn't really be welcome. :) – Lawrence Dec 6 '18 at 2:06
  • @Lawrence Yes, sorry, I'm not native English speaker. I mean "remuneration". – candlejack Dec 6 '18 at 2:07
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    I think you may also be looking for terms like "profit sharing", "employ owned company", "stock options" (as a form of reimbursement), "partnerships", and "cooperatives". All have their pros and cons. The main problem "according to the value they contribute" - and it turns out that beyond a very tiny operation, deciding who provides what "value" is effectively undefined (partly opinion based, multiple definitions of value and ways to try to calculate it, and some forms of value are not easily or at all quantifiable like "morale", "societal contribution", or safety/risk). – BrianH Dec 6 '18 at 2:51
  • Have you asked your employees if they want a significant part of their income to depend on the success of the company, or if they might prefer an amount that’s a bit smaller on average but will be guaranteed in bad times as well as good (unless the company actually goes bust, of course)? Profit-related pay tends to be unpopular in practice, because employees need a dependable income. – Mike Scott Dec 6 '18 at 6:54

You can always give bonuses at your discretion to your staff.

A bonus is any financial compensation, reward, or return over and above the normal expectations of the recipient. A bonus can be given to a company’s employees and executives, prospective employees, or shareholders. - investopedia

Taxation and other details vary from jurisdiction to jurisdiction, but the principle is that this is an amount you as employer can set at the end of each year. Getting a bonus one year doesn't automatically mean they'd get the same bonus (or any bonus) next year.

This keeps things flexible, and you can apply your 30% of profits as you wish - by effort, by base salary, by contribution to the bottom line, by personal need, etc. If this is a large sum, you'll need to consider issues of fairness and openness regarding basis and amount.

Note, though, that if you manage to tie 100% of your employees' salary to bonuses, then in a year that the company doesn't earn very much or goes negative, then your employees don't actually earn anything that year. This would be bad for your staff, and may actually be prohibited by some (many? all?) jurisdictions. It also makes it hard for people to budget for living expenses, mortgages etc when the salary isn't consistent from paycheck to paycheck. Further, company profits are often tallied annually; making staff wait for a whole year before getting paid isn't usually a good recruitment strategy.

  • Is there a model where each employee is a shareholder? That the earnings are proportional to the profits of the company. 30% to distribute among employees. Of course, if the income is very low or negative, in that case I would apply a flat rate. I'm looking for a model where each employee feels more motivated by what he/she does and feels identified by it. – candlejack Dec 6 '18 at 2:32
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    @candlejack They exist. en.wikipedia.org/wiki/Worker_cooperative – ceejayoz Dec 6 '18 at 2:43
