What are the pros and cons of paying employees with a % of the

>>1097841
The cons is that you can't be a massive jew and just keep the profits to yourself.
There are no pros.

This can very cheap if it's a new company and you cannot afford a full salary such a position would command.

It's also a good incentive for employees to put a lot of hard work in.

Cons are that it is expensive once it matures.

>>1097846
Of course there are pros. They will work harder because they'll know why they are working for. Not to mention they'll be happier and respect you more...

>>1097846

Won't you give them greater incentives to work harder?
As long as he keeps his taskmasters making a profit, a McSlave has no incentive to give his best, but when you can double your wages by actually doing real work, things change.

>>1097848
Won't the employees loyalty balance the extra expenses?

>>1097855
Yes but this is better for <10 person startup company.

>>1097861
I can see this working really well in a >100 employees brothel.

>>1097841
Con:
-Most people want a steady wage, they don't want the risk of volatile payments
-Incredibly hard to apportion the % of profits
-Doesn't scale well at all (max 50 people)
-People could take the socialist/communist approach that they're only one person and can't change the entire outcome of the company so why bother that much
-Original equity holder / capital provider would be taking a massive haircut if the underlying equity that's used for payments doesn't belong to him

Pros:
-People could very well be more motivated

I have seen both and percentage pay produces harder work at a faster rate.

>>1097915
>Most people want a steady wage, they don't want the risk of volatile payments
You don't want those sheep.
>Incredibly hard to apportion the % of profits
Employees are already taking a cut of your income, you just have to figure out how much, and then find the adjustment that gives the most incentive.
>Doesn't scale well at all (max 50 people)
You can give 0,1%, 0,01%, etc...; depends of how big the business is. Numbers are infinite, yoh.
>People could take the socialist/communist approach that they're only one person and can't change the entire outcome of the company so why bother that much
You would be surprised by how quick managers would fire useless slobs in those situations (remember, the manager got more incentive to get paid).

>>1098280
The manager and staff are also going to be very protective about their cut. If you grow rapidly and need to hire more staff then you're probably going to face a lot of trouble cutting people's share of the equity to offer it to new people. This pressure can easily result in understaffing.

>You don't want those sheep
News flash, there is a reason people don't enter start ups after 30 unless they are high level. Financial security at older ages is the smart thing to do instead of hoping into some company you don't have a huge say in succeeds.

>You can give tiny amounts of equity
Haha, the amount of administration needed for this system would be fucked

But, hey OP, don't let reason get in the way of your dreams. This is revolutionary. Now you just need to find a retard who's willing to commit capital and take a huge haircut on it for the staff...

>>1099246
Also, to touch on the first reason again, if you expand and then need to cut people's equity then your taking away a portion of the equity that they've worked hard to grow. They would need to be taking real pay cuts to higher more staff. This system would be an absolute nightmare.

>>1099248
*hire lolololololololololol

>>1098280
>>1099246

Easy solution: performance based bonuses for middle and top management.

Best of both worlds!

Wasn't this part of the cause of CEO salaries boom in the 90s?

>>1097841
What happens when the company enters loss minimization?

Are people working for free?

>>1099265
You'd still need to have awkward conversations with management every year where you tell them they've done so well that the business is growing. And you're cutting their equity stake by 3% to employ 5% more people.

No one here has addressed the issue of raising the initial capital and where the equity for the employees comes from. Also, at what stage do you start allocating equity because it will be useless until the business becomes profitable. This is a huge issue with tech stocks who burn cash for years to get market share before turning a profit WHILE employing more and more people. Furthermore, as >>1099304 says, most companies will have down years and some companies stagnate for quite a while. Why would anyone in their right mind stay around in a struggling company?

>>1099271
Yes and no. The CEO salary boom was because a lot of literature came out saying that the managers should be given significant equity stakes in their compensation packages. Its still a contestable point as some CEOs have been know to cut corners to reach targets and then sell shares.

>>1099429

>You'd still need to have awkward conversations with management every year where you tell them they've done so well that the business is growing. And you're cutting their equity stake by 3% to employ 5% more people.

I'm not talking about equity stakes, I'm talking about performance based bonuses which can be fixed and capped. If you offer the right incentives, this also lets you get away with paying a slightly lower than industry average base salary, which is a nice buffer in less successful years.

>>1097841
My company has profit sharing, or rather shared ownership. I'll get money if the company sells. Here's the thing though. Til then, I'm stuck with my salary while my peers are being paid in stock and such that is tangible. If my company doesn't sell, I'm shit out of luck. If I quit, I'm out of luck. So, it's kind of shit.

>>1099808
I worked for a company that had profit sharing once. Unfortunately D&H has really shit management. So you spend all day with fuck all to do, get one small bonus check out of it, and then they fire a bunch of people.

I sell cars for commision and am more motivated to increase the profit margin since i get a percent of that. A lot less people would sell cars if it was salary, or at least they wouldn't push for there to be a bigger overall profit