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Tenuous Trust Insurance Company - Profit Sharing

This week Tenuous Trust took another opportunity to tweak their company profit-sharing program designed to reward lower level associates for their successful efforts.

Although corporate profit-sharing programs have been common for decades, the CEO of Tenuous Trust attributes the inspiration for their program to the film industry. “About five years ago I was watching an old MGM film called Down on the Farm. Mr. Whipple, the farmer, was using a stubborn donkey to plow his rough and craggy field. It fascinated me that Mr. Whipple was able to work his donkey to exhaustion by just dangling carrot. The mere idea of obtaining the prized carrot, no matter how unreachable, deceived the donkey into working all day and night. The very next day I brought my senior executives together to immediately implement a program that allowed us to similarly control our middle-management and lower associates. Of course, we won’t use carrots in a sophisticated 21st century insurance company, no, our trick is to dangle the theoretical possibility of earning a few extra dollars in front of our donkeys.”

The company has since restructured the program in one way or another each subsequent year.  “The first year the program worked perfectly. An associate making about $50,000 was fooled into working harder in hopes of earning a maximum bonus of $4,000. I think we eventually awarded those associates about $100 after taxes. We felt rewards at that level best balanced the associate’s hopes and dreams with our robust company profits. An associate ought to feel splendid about an extra $100 at the end of a year. I mean, imagine walking down the street and just being handed one-hundred bucks - Wowza! That would really hit the spot after a year of overtime.”

After that first year’s inconsequential payout, Tenuous Trust began to realize larger payouts that significantly impacted profits. Eventually bonuses close to the theoretical payout of $4,000 were even realized. That’s when ideas of significant restructuring became a top priority. “The very first year was great, our associates produced better results and were rewarded with a small payout. Our messaging was to ask associates to work even harder the next year, so they could earn an even larger payout. Well, they did work harder, much harder, and we earned obscene profits. But it just didn’t seem like good corporate leadership to surrender a minute portion of those profits to the lowest level of our associates.” Tenuous Trust now sets intensely optimistic goals and pays no bonus at all until those goals are surpassed.

Ultimately, Tenuous Trust was able to get the program under control. “We got into a situation where we ended up paying routine bonuses and that was never our intention. And worse, our donkeys were beginning to associate increased rewards with their phenomenal efforts. The program is now like dangling an entire basket of carrots in front those donkeys without so much as a nibble.  Those suckers will run day and night just to get a sniff of a carrot (laughter), they’ll snort, and buck, and (laughter) …. Oh, those damned stupid donkeys. (intense laughter) You’ll have to excuse me …. I can’t …stop …”

 

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