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Salary question


madaboutlfc

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Id be grateful if someone could give a fair idea of what a profit sharing deal for the head of revenue centre should be with regards to him achieving and exceeding the targets. What percentage of profit sharing would be fair on his part to negotiate?

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I have no idea but I would have thought a sensible basis would be to look at the business's plans/budgets for the forthcoming 5 years (the business should have those available if they are at all on the ball). Essentially that is your only basis to work on - there will be no industry standard because every business in every industry will have its own very different profit and loss forecasts.

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I have no idea but I would have thought a sensible basis would be to look at the business's plans/budgets for the forthcoming 5 years (the business should have those available if they are at all on the ball). Essentially that is your only basis to work on - there will be no industry standard because every business in every industry will have its own very different profit and loss forecasts.

well we had a verbal agreement in 2009 that should he hit the targets by June 2012 we would ensure that he gets a certain amount for annual salary. However, those targets were achieved in 2011 and looking at the figures the person in charge is exceeding those targets by almost 40%. He was offered a better contract but he wants to negotiate profit sharing of 35% plus current salary mainly because his part of the business is on average growing at over 90% year on year.

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well we had a verbal agreement in 2009 that should he hit the targets by June 2012 we would ensure that he gets a certain amount for annual salary. However, those targets were achieved in 2011 and looking at the figures the person in charge is exceeding those targets by almost 40%. He was offered a better contract but he wants to negotiate profit sharing of 35% plus current salary mainly because his part of the business is on average growing at over 90% year on year.

 

35% of the profits?

 

sounds like you're running a market stall if you take that seriously

 

give us some details? what's the business, what's the turnover, the profit, how many employees, what does everyone do? etc etc

 

otherwise the answer has to be twelvety I'm afraid

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His bonus should be a percentage of his wage, not the profits. He should be able to earn 50 % of his salary as a bonus, this depends on the targets you set, these should be revised every few months, not every 3 years

 

if his bonus is not somehow linked to profits then how can it be sustained?

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if his bonus is not somehow linked to profits then how can it be sustained?

No profit = no bonus... fund it out of profit, pay it as a % of the salary.

 

Does the chap in question work alone? If not and there's a team aroun him, make him work it out by saying (for example), we'll set aside 10% (pick a number) of NOPBT for you to pay yourself and your team bonuses... That way you get your slice first, he gets to manage his team as I am sure he's not doing it all himself, and they all get a stake in the success: or not if he pays it all to himsefl and they all walk...

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35% of the profits?

 

sounds like you're running a market stall if you take that seriously

 

give us some details? what's the business, what's the turnover, the profit, how many employees, what does everyone do? etc etc

 

otherwise the answer has to be twelvety I'm afraid

 

We provide business solutions to the telecom sector such as IVR, Agent Assisted IVRs, Device Based Applications, WAP and White Label products in Pakistan. The total turnover of the business is US$5 m at year end 2012 but with a couple of new projects in the pipeline we conservatively expect it to reach close to $13m by the end of fin yr 2013. The Gross Profit Margin is 68% and the Net Profit margin is 38%. These numbers will improve to 75% and 43% respectively. We have in total 21 permanent employees with the person in question leading a team of 11 which engages from product conceptualizations to closing the deals. His direct contributions to the turnover would be around 7m. He joined at a salary of $6k but we have a verbal agreement to increase it to $10k once his targets were achieved and we kept our side of the team.

 

PS:- 35% of the profit sharing asked for is from the new deals we are expected to sign.

Edited by madaboutlfc
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We provide business solutions to the telecom sector such as IVR, Agent Assisted IVRs, Device Based Applications, WAP and White Label products in Pakistan. The total turnover of the business is US$5 m at year end 2012 but with a couple of new projects in the pipeline we conservatively expect it to reach close to $13m by the end of fin yr 2013. The Gross Profit Margin is 68% and the Net Profit margin is 38%. These numbers will improve to 75% and 43% respectively. We have in total 21 permanent employees with the person in question leading a team of 11 which engages from product conceptualizations to closing the deals. His direct contributions to the turnover would be around 7m. He joined at a salary of $6k but we have a verbal agreement to increase it to $10k once his targets were achieved and we kept our side of the team.

 

PS:- 35% of the profit sharing asked for is from the new deals we are expected to sign.

 

 

so you have a net profit arounf £1.9mil, and the employee in question is on 6k per what? Week? month? year? even if its per month, thats 72k a year salary, and he wants 35% of 1.9mil as a bonus???

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so you have a net profit arounf £1.9mil, and the employee in question is on 6k per what? Week? month? year? even if its per month, thats 72k a year salary, and he wants 35% of 1.9mil as a bonus???

hes on 10k a month and the net profit figures are after paying staff salaries. The 35% is of the net profit generated from the 7m which would be around 1m.

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I know it's the genny, but I am still on a football forum, aren't I?

 

I hope you tell him that you've been taking advice from "industry experts". Somewhere, there's a coi-carp forum dispensing advice to FSG as to whether they should sack the manager and hire a new bloke, or not.

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hes on 10k a month and the net profit figures are after paying staff salaries. The 35% is of the net profit generated from the 7m which would be around 1m.

If he has done a good job he gets 50% of his wages as an added bonus. He may also be given some share options to buy into. That should help him near the 200k mark, if he wants more, dig him

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Why the hell should his bonus be linked to/restricted by his salary?

 

Makes no sense.

 

He should be evaluated on the value he adds to the business - so if he hits his targets he gets paid his salary and a nominal bonus. That is, after all, his job. A bonus should be exactly that ... a bonus. If he 'shoots the lights out' (i.e. does way better than any of his peers and perhaps better than anyone else who you could recruit into the role would do), then just pay the f***er.

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thanks for some good advise, I think restricting someone to a percentage their salary would definitely not be an incentive. We were thinking of some sort of incentive scheme which would be linked to achieving the targets plus a higher percentage over that amount.

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Why the hell should his bonus be linked to/restricted by his salary?

 

Makes no sense.

 

He should be evaluated on the value he adds to the business - so if he hits his targets he gets paid his salary and a nominal bonus. That is, after all, his job. A bonus should be exactly that ... a bonus. If he 'shoots the lights out' (i.e. does way better than any of his peers and perhaps better than anyone else who you could recruit into the role would do), then just pay the f***er.

I'm with you on this

 

and the way Madeabaoutlfc describes what this lad and his team do.........from product conceptualisation to sales - doesn't get much more important than that, they're creating the business and selling the products too; don't lose this team - they're making you rich MALFC

 

 

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