The formula to pay your staff so your company expands

From my experience most companies I work with pay their staff on a “Basic Salary” per month. This creates an environment where your staff do not share in the pain when your company does poorly, and they also don’t share in the winnings when your company does well. As a result you end up with a staff who is not interested or motivated to work more than necessary in order to not get fired.

This brings another point across, always reward high production and don’t reward low production. One must get paid based on one’s level of production. And production is NOT hours worked, it is completed tasks done in one’s area of responsibility. So why pay your staff the same amount of pay each month, without rewarding them if they produced more than other months, or paying them less if they produced less than previous months?

Your staff need to have a reason to be interested in your company's success, anf the best way to do this is to let them share in the company's wins and losses.

The good news is that there is a better way. Pay your staff based on the percentage of income you make.

Here is the exact formula:

1.      Take your Gross Income, and subtract your Cost of Sales and Sales Tax(VAT).

2.      This gives your Corrected Gross Income. This is your true income.

3.      Now take 30% of Corrected Gross Income and use this as staff pay.

4.      Divide this amount up amongst your staff based on levels of production and seniority levels. And yes your pay must be included in this amount.

Take note of National Minimum Wages in your country. So a good solution is to pay the minimum wage, and make the rest commission. The best versions on staff pay are where the staff member can not really get buy on his basic only, but if he produces well for the month he can triple his salary. 

One warning though, STAFF PAY DEPENDS ON DELIVERY. Be careful of starting to fixate on Gross Income now that you know you get paid based on how high it gets! Your public is your income and so focus on this instead:

1.      Push delivery

2.      Push good and standard quality of delivery

3.      Handle your public well through communication

This strategy does depend on a little honesty though, you will need to communicate every week to your staff what Staff Pay for the month is so far. You don’t need to give Gross Income or Profit stats, but you do need to effectively let your staff know what the 30% amount is as they work to get their pay higher and higher.

Using this method I have witnessed how companies have turned around, and how staff have started SUPPORTING the owner and his executives. Staff started working overtime out of their own accord. Staff even demanded to come in on weekends as they know that when staff pay is low before their payday, they have the power to boost their own pay and do so.

This creates and environment where one’s staff is interested in the success of you your company just as much as you are, and this creates a company culture by means of necessity. Your staff will even start putting in ethics on the other staff when they see out points, all because they have skin in the game. 

This article is based in part on the Business Administration works of L. Ron Hubbard. Contact us to learn more about how these policies and strategies can benefit you, and how we use them to consult business owners. Book a session with us here.