NationStates Jolt Archive

I’m seriously thinking of starting up a company. And since you’re all bastards who never agree, I thought it would be fun to see your commentary. :)
You don’t learn that much from yes-people :)

So here it starts.

14 years ago, I was in USA and most stores I visited had a kind of point-of-sales (POS) system. It’s nothing more than a fancy computerized cash register with extended features.

Present times, in Europe, many stores still use an ordinary cash register or just an outdated calculator, in special in restaurants and bars.

Sure, there are restaurants out here that use a POS system, but IMHO there’s some market share left. A small field study indicated that most of those systems are rather very expensive (which is not the case in USA). I also noticed that those systems are not that user friendly, in particular in ease to learn.

The next 3 months I’ll go on with doing the analysis of the requirements, user profiles and stuff. 6 to 9 months later I think I’m able to finish a commercial first release.
Asap I’ll start producing a state of the art business plan. IMHO that’s the key of a successful business.

The POS system for restaurants will be easy to learn, due the special condition of that business: the turnover rate is rather high and the educational level of the users is low to medium. The frequency of use is very high and mandatory.

At the start I will do most of the work on my own, but I foresee that I need people rather quickly: salespeople, maintenance guys, etc…

Salaries are very expensive in Europe. Or you pay peanuts and get monkeys, or you pay too much, to have qualified and/or talented ones. None of them is excellent.

The salary problem is a real brain pain for me, so I was thinking about a nice solution to attract nice people at a fair price. This is my idea:

I’ll give them a legal minimum salary but it will be extended by a bonus percentile of the net profit (25%). So when I have a net three month profit of 20,000€, I’ll return 5,000€ to the people working for me.

Further on, I’ll use an extra parameter to divide the bonuses over the employees. For each year they are in service they’ll receive a credit point. The specific bonus will be related to the amount of credits points an individual has reached.

By instance:
John is working for 3 years and will receive 3 credit points.
Anna is having 2 credit points and Lame Duck 1 point.

When a bonus is returned, by instance the 5,000€ of above, then in that case John will receive 2,500€, Anna 1,667€ and Lame Duck 883€.

It’s wise to use this credit system to make sure that good people stay at the firm.

To be honest, this concept is not invented by me but by Ricardo Semler of the SEMCO company.

IMHO this is a nice system, and before you cry out ‘COMMUNISM!’, I can tell you it’s not. The people will not receive shares and thus will not be the (partly) owner of the company. They just receive a rather huge profit share to motivate them to work hard and to keep the costs low.

So point your arrows in acid and react. :) Thanks a lot.

So by paying minimum wage you want to attract only the kind of workers propered to work for such?

Then I guess you'll get the shit while any competitors paying haigher wages will get the cream.

If you're successful will you voluntarily limit the size of your company?

So by paying minimum wage you want to attract only the kind of workers propered to work for such?

Then I guess you'll get the shit while any competitors paying haigher wages will get the cream.

You didn't read all. That's why I include a rather big bonus.

I suggest you talk to a business planner. They know legal stuff about this.

I would think you would be better just paying award rates or slightly higher. It's far less stuffing around.

I’ll give them a legal minimum salary but it will be extended by a bonus percentile of the net profit (25%). So when I have a net three month profit of 20,000€, I’ll return 5,000€ to the people working for me.

Further on, I’ll use an extra parameter to divide the bonuses over the employees. For each year they are in service they’ll receive a credit point. The specific bonus will be related to the amount of credits points an individual has reached.

By instance:
John is working for 3 years and will receive 3 credit points.
Anna is having 2 credit points and Lame Duck 1 point.

When a bonus is returned, by instance the 5,000€ of above, then in that case John will receive 2,500€, Anna 1,667€ and Lame Duck 883€.

It’s wise to use this credit system to make sure that good people stay at the firm.


As for Italy:
Good luck with the national collective labour contract, and with the workers' unions.

Generally speaking, after 5 years your company is going, no one will look for a new job from you, unless they're quite desperate, because the bonus is going to go almost entirely in the pockets of the old-timers. Bye-bye to new ideas and competitiveness...

You didn't read all. That's why I include a rather big bonus.

Personally, I wouldn't bank my earnings on how well my boss runs his business.

If you somehow screw up, and through no fault of me you make no profit in a year, I have just worked for the entire year for minimum wage.

If you're successful will you voluntarily limit the size of your company?

As a matter of fact: yes.

IMHO, it will never be a giant. I'll be happy with a nice small company which is making a nice profit.

But in case it would go wild, I certainly would limit the size. I'm not interested to be the big boss of a bunch of managers who would throw me out after x years.

Do you really think it makes any difference for me making 1,000,000€ or 2,000,000€? I would be very very happy making 1,000,000€ each year. Odds are low that I’ll ever reach that level.

I'm looking for making good money, but I’m not another greedy entrepreneur.

As for Italy:
Good luck with the national collective labour contract, and with the workers' unions.

Generally speaking, after 5 years your company is going, no one will look for a new job from you, unless they're quite desperate, because the bonus is going to go almost entirely in the pockets of the old-timers. Bye-bye to new ideas and competitiveness...

No, I don't believe that. People will always leave: they move to another town or country, become seriously ill, retire, die or just receive a better opportunity from competition.

Semco suggests also changing the credit reward after 5 years. When they are 5 years in service, increase the credit points every 3 or 5 years for the specific individual.

You didn't read all. That's why I include a rather big bonus.

I did read it all. I don't think the bonus idea is viable. To attract the top people you have to pay the top wage.

There is just no getting away from that.

Ask yourself, would you be attracted to work for a startup company for minimum wage, with a bonus based on how well the company does?

Is it worth takeing that risk? I wouldn't; perhaps for an established company who's history of growth I could see, then I may be willing to take that risk, but for a startup company, nope not I.

I suggest you talk to a business planner. They know legal stuff about this.

I would think you would be better just paying award rates or slightly higher. It's far less stuffing around.

My brother in law is an accountant. I will go to a lawyer and my bank will review my business plan as well.

Because you're right. The idea might work, but how it's handled legally, that’s something for experts in that matter.

You plan to have profit?
Naive. All serious business go even otherwise taxes will kill you ;)

Personally, I wouldn't bank my earnings on how well my boss runs his business.

If you somehow screw up, and through no fault of me you make no profit in a year, I have just worked for the entire year for minimum wage.

Yes, you're again right. That's why you have to inform the people on time. Each 3 months you'll give them the figures and plans of the past and future.

It's key to inform the people properly and on time. If needed you'll teach them the basic stuff about doing financial business.

I did read it all. I don't think the bonus idea is viable. To attract the top people you have to pay the top wage.

There is just no getting away from that.

Ask yourself, would you be attracted to work for a startup company for minimum wage, with a bonus based on how well the company does?

Is it worth takeing that risk? I wouldn't; perhaps for an established company who's history of growth I could see, then I may be willing to take that risk, but for a startup company, nope not I.

At the start, I don't need 'top' people. No, a Bill Gates will never work for me.

But I think I can attract a promised talent just leaving college or university.
People that start their career do not receive high salaries anywhere.

I agree that it will be difficult to attract people with experience. People in their 30ties, 40ties or older.

No, I don't believe that. People will always leave: they move to another town or country, become seriously ill, retire, die or just receive a better opportunity from competition.
Are you thinking of Europe or of America?

Semco suggests also changing the credit reward after 5 years. When they are 5 years in service, increase the credit points every 3 or 5 years for the specific individual.
It wouldn't make a big difference, though.

You plan to have profit?
Naive. All serious business go even otherwise taxes will kill you ;)

I'm not an expert in accountancy, but I know more than the basics.

Believe me, there are batteries legal 'tricks' to make profit and still not paying killing taxes.

At the start, I don't need 'top' people. No, a Bill Gates will never work for me.

But I think I can attract a promised talent just leaving college or university.
People that start their career do not receive high salaries anywhere.

I agree that it will be difficult to attract people with experience. People in their 30ties, 40ties or older.

It's an intriguing idea, and yes perhaps you may attract some talented graduates. But for a startup company you are going to need some expericanced staff.

You may strike lucky though with teh staff yoyu are able to attract, and you may even luck out in the first few years and see some sustainable growth, you never know untill you try I guess.

I think it's a brave move, I hope it works out for you.

Are you thinking of Europe or of America?


It wouldn't make a big difference, though.

Eh, the business will be in Europe.

Yes, it is making difference. Semco is a rather huge company in Brazil, in the seventies it was virtual broken. The company had a classic HR management style. He used the system as explained above and he avoided a total collapse.

Look, the idea is simple: in good times, the company is making good money and the people will receive much more than in similar businesses. In bad times they'll receive less.

People are greedy in nature, most of us like money.

In the Semco system, people see and feel a correlation between working hard and earning a salary.
The waste is also lower in the Semco system. Employees can influence the costs a lot. But if there's no benefit for them, they don't bother. In the Semco system it's making difference for their own salary, so they start watching the costs.

There's another thing. In Europe, in general, you can't change the basic salary (but you can alter the bonus). So in bad times, they have to fire many people, to get the costs down. Worst case they go broke.

Semco had hard times as well, even when the 'Semco' system was initiated but they had to fire much less people as the competition. The main cost for any company is in general the salary. In the Semco system it's dancing along the profit of the company.

I'm not an expert in accountancy, but I know more than the basics.

Believe me, there are batteries legal 'tricks' to make profit and still not paying killing taxes.

Not in Italy nor in Czech Republic.
Unless you make so much that doing charity really starts making sense.

BTW, I do run a business in Europe.

Ayways, if you plan to run a small business try to find out what your employees really want. I had people coming out from university working on project contracts (Co.Co.Co. for the Italians around) where money wasn't the real concern but references were.
I think that your planning is something premature and this kind of planning could actually ruin your business plan if you stick too much to it.

As a matter of fact: yes.

IMHO, it will never be a giant. I'll be happy with a nice small company which is making a nice profit.

But in case it would go wild, I certainly would limit the size. I'm not interested to be the big boss of a bunch of managers who would throw me out after x years.

Do you really think it makes any difference for me making 1,000,000€ or 2,000,000€? I would be very very happy making 1,000,000€ each year. Odds are low that I’ll ever reach that level.

I'm looking for making good money, but I’m not another greedy entrepreneur.

So you intend to hire talented people who will be paid a part of the profits, but at some point you intend to restrict your profits and therefore the salaries of your workers? I hope you know a lot of talented people looking for employment who don't care if their salary grows as they get older, because I've never met any.

It's an intriguing idea, and yes perhaps you may attract some talented graduates. But for a startup company you are going to need some expericanced staff.

You may strike lucky though with teh staff yoyu are able to attract, and you may even luck out in the first few years and see some sustainable growth, you never know untill you try I guess.

I think it's a brave move, I hope it works out for you.

Well, I'm not stupid. At the start, I'll do all on my own. When I can afford people and there's a need for, I'll hire them. I will not hire people just for the cause of having people working for me.

I think I'll start hiring people after 6 to 12 months. I don't know yet, I'm still in the concept phase. I'll start doing the business plan soon then I'll know more.

Starting a business is always brave.

Look I’m 40, I lost my high paid job (bank sector), but I’m not in the mood for crying like a baby at night. I’m also sick for working for someone else. In the end they always treat you like shit.

In 2001, I lost my job as well (due 911), it took me one full year to find a new job at a much lower salary (a junior salary again). At my age I’m not in the mood anymore to accept a junior salary once more.

I know that I’ll not receive a high profit in the first two years, but I’m confident and assure that I’ll make more than ever before. And this time, it’s my own business, no one will fire me again just because some f*cking managers played with our money and lives Russian financial roulette.

Not in Italy nor in Czech Republic.
Unless you make so much that doing charity really starts making sense.

BTW, I do run a business in Europe.

Ayways, if you plan to run a small business try to find out what your employees really want. I had people coming out from university working on project contracts (Co.Co.Co. for the Italians around) where money wasn't the real concern but references were.
I think that your planning is something premature and this kind of planning could actually ruin your business plan if you stick too much to it.

No worries. I have a management degree, I think I know what I'm doing. At least that’s what I told myself :p

Sure, that's no guarantee it will work out.

I don't know yet where I'll locate the business (I will have to move as well). I'll talk with expert people in that matter. I already received nice ideas (an accountant told me, to start up a Limited in Ireland and then move it to Luxemburg, where it will be transformed to an Incorporation at minimum cost, and Luxemburg is having low taxes :p). But other ideas look promising as well.

But first thing first, I'll need to create my product first.

So you intend to hire talented people who will be paid a part of the profits, but at some point you intend to restrict your profits and therefore the salaries of your workers? I hope you know a lot of talented people looking for employment who don't care if their salary grows as they get older, because I've never met any.

In general, at least in Europe, people do get higher salaries due their age (experience).

Restricting the size limit doesn't influence their share profit that much. You're maybe confused. If your company is flying at cruise speed, the net profit will be more or less the same. If you attract new people, in theory your gross profit will increase, but it will be not that much different if you calculate the net profit per employee.

Well, I'm not afraid for retrieving people. Many companies, big ones, are collapsing now.

In general, at least in Europe, people do get higher salaries due their age (experience).

Restricting the size limit doesn't influence their share profit that much. You're maybe confused. If your company is flying at cruise speed, the net profit will be more or less the same. If you attract new people, in theory your gross profit will increase, but it will be not that much different if you calculate the net profit per employee.

Well, I'm not afraid for retrieving people. Many companies, big ones, are collapsing now.

That's my point - if the net profit stays the same your workers will continue to earn the same and will lose motivation or leave your company because their wages are not growing. Look at the example that you gave in the OP - if your profit doesn't grow then John will earn less after another year while Anna will earn exactly the same. Any business that reduces the wages of the most senior staff is going to suffer from a lack of expertise.

That's my point - if the net profit stays the same your workers will continue to earn the same and will lose motivation or leave your company because their wages are not growing. Look at the example that you gave in the OP - if your profit doesn't grow then John will earn less after another year while Anna will earn exactly the same. Any business that reduces the wages of the most senior staff is going to suffer from a lack of expertise.

No, not necessarily.

We'll take an easy example.

We have McRonalds, the employees have a fixed salary of 1000€ a month. Salary raises are very narrow. Inflation will influence their salary a little (2% a year or something, depends about the country)

We have a McSemcos, the employees can make a 500€ fix each month + an extended bonus of 1000 €.

At McRonalds, if they work hard or not or look for the costs or don't, the salary remains virtually the same.

At McSemcos as well, but due the bonus system they will earn much more in the long turn.

Also, the salary minimum will not be the same for all levels. A cashier at McSemcos will earn a minimum fix of €500, but when he's achieving a manager level, it will be higher.

I'm aware that I didn't explain all, it's too much data to enter, but thanks for the input anyway.



Did you know that almost any business can work with 5% to 10% less costs a year? Without providing fewer service or firing people. The whole idea of Semco is that employee act as cost watchers. And they surely will do, because it’s influencing their salary.

profit sharing is fine but a commission system rewards hard work.

No, not necessarily.

We'll take an easy example.

We have McRonalds, the employees have a fixed salary of 1000€ a month. Salary raises are very narrow. Inflation will influence their salary a little (2% a year or something, depends about the country)

We have a McSemcos, the employees can make a 500€ fix each month + an extended bonus of 1000 €.

At McRonalds, if they work hard or not or look for the costs or don't, the salary remains virtually the same.

At McSemcos as well, but due the bonus system they will earn much more in the long turn.

Also, the salary minimum will not be the same for all levels. A cashier at McSemcos will earn a minimum fix of €500, but when he's achieving a manager level, it will be higher.

I'm aware that I didn't explain all, it's too much data to enter, but thanks for the input anyway.



Did you know that almost any business can work with 5% to 10% less costs a year? Without providing fewer service or firing people. The whole idea of Semco is that employee act as cost watchers. And they surely will do, because it’s influencing their salary.

But as I have repeatedly pointed out - the longer someone works for the business you are describing, the less money they will get from the profit bonus unless you increase profits significantly. The system works at Semco because it grows enormously - 40% a year, I believe. In your system, your senior staff would have little motivation to worry about keeping costs low because the amount they earn from profits keeps getting smaller every year while the fixed part keep getting larger - at great expense to your business. I think you need to completely rethink your business model and stop trying to apply methods which worked for a fast growing business to a business which you intend to stop gorwing after a period of time.

But as I have repeatedly pointed out - the longer someone works for the business you are describing, the less money they will get from the profit bonus unless you increase profits significantly. The system works at Semco because it grows enormously - 40% a year, I believe. In your system, your senior staff would have little motivation to worry about keeping costs low because the amount they earn from profits keeps getting smaller every year while the fixed part keep getting larger - at great expense to your business. I think you need to completely rethink your business model and stop trying to apply methods which worked for a fast growing business to a business which you intend to stop gorwing after a period of time.

I don't think it's wise to create a business plan for the long term. A vague vision will do.

I'm not the Soviet Union with 5 year plans or something and we all know what happened with them.

Believe me, it's already difficult to create a business plan that predicts the next 2 coming years. And I'm rather sure that the system will work for that time. After that time, I'll see what's next. The size limit will not occur in 2 years or even in 10 years. Even when I'm very successful, it will take time to grow from 0 to 100 people or something.

I don't believe in Microsoft, Google, Apple and other mega stuff for my case.
People forget that for such companies there are 10,000 similar companies doing almost the same, that fail.

I don't pretend it can be as big as those companies. I will be happy when it grows naturally and is making profit.

A business plan isn’t a static document, you change it on the road when needed.

profit sharing is fine but a commission system rewards hard work.

A commission system could also lead to a company full of egoist bastards.

One could sell too much unneeded stuff to a client, on the short-term it is good for his commission. On the long term it could negatively influence the profit of the company.

To call a big name: ENRON.

i wouldn't start up a company. my parents have run theirs for over 25 years, and i just wouldn't. i work for them now, but when they come to retire we're selling up and i'm out of here!

plus, i don't think there's a lack of EPOS here in the UK. there's only one, maybe two stores i know who don't have an EPOS

i wouldn't start up a company. my parents have run theirs for over 25 years, and i just wouldn't. i work for them now, but when they come to retire we're selling up and i'm out of here!

plus, i don't think there's a lack of EPOS here in the UK. there's only one, maybe two stores i know who don't have an EPOS

In USA it's the same. Most restaurants, I visited, had a POS. But here it's not. About 50% is having one.

Another nice thing is, that countless restaurants are born everyday. :)

I also checked the prices and I was amazed how much they paid for it. I think I can deliver cheaper and offer better quality.

You didn't read all. That's why I include a rather big bonus.

The problem is even if the bonus IS pretty awesome most people don't trust the "advertised" examples of bonuses

I think you would have a harder time finding the people then if you just paid the wages strait out at least initially. When you see minimum wage your mind kind of skips over the bonus part even if it should not do so. The bare fact of the matter is that the bonus is a gamble, employees dont want to take too big of a gamble on their employer for what SHOULD be regular income

i wouldn't start up a company. my parents have run theirs for over 25 years, and i just wouldn't. i work for them now, but when they come to retire we're selling up and i'm out of here!

And then what?

The problem is even if the bonus IS pretty awesome most people don't trust the "advertised" examples of bonuses

I think you would have a harder time finding the people then if you just paid the wages strait out at least initially. When you see minimum wage your mind kind of skips over the bonus part even if it should not do so. The bare fact of the matter is that the bonus is a gamble, employees dont want to take too big of a gamble on their employer for what SHOULD be regular income

You're right.

There are several things I've to manage to make it trustable:

- I have to make sure that the product is looking very good.

- Inform them on time and accurate about the balances and stuff. Tell them honestly when break-even will be reached, etc...

- I have to brush my teeth.

I expect that people will try it out for some time. Of course they will not wait for 2 years or something, before a profit is reached, but that's not the plan.

Don't forget an enormous part of my stock is duplicated cheap. It's partly software.

You're right.

There are several things I've to manage to make it trustable:

- I have to make sure that the product is looking very good.

- Inform them on time and accurate about the balances and stuff. Tell them honestly when break-even will be reached, etc...

- I have to brush my teeth.

I expect that people will try it out for some time. Of course they will not wait for 2 years or something, before a profit is reached, but that's not the plan.

Don't forget an enormous part of my stock is duplicated cheap. It's partly software.
1) They still will skip over it depending on what positions you are hiring for ... at least your first round of hires. Maybe later on if you get a great rep you will be able to swing it but that first round you will get minimum wage quality workers

2) I did not see your plan for the software if this was an in house development or if you were purchasing a software package

If purchasing "easily duplicated" does != cheep licensing is a BITCH with most commercial operating systems and software. While we dont do POS stuff our annual licensing costs are way way way higher then hardware purchases

Software is a hella expensive commodity nowadays

The problem is even if the bonus IS pretty awesome most people don't trust the "advertised" examples of bonuses

I think you would have a harder time finding the people then if you just paid the wages strait out at least initially. When you see minimum wage your mind kind of skips over the bonus part even if it should not do so. The bare fact of the matter is that the bonus is a gamble, employees dont want to take too big of a gamble on their employer for what SHOULD be regular income

For young people, just leaving school, the salary isn't such big deal. At that age, adventures are still permitted.

Most of them start at a rather low salary anyway. Their initial salary will be no much lower than what they get in an average bank or insurance company.

I'm aware that at the start, it will be impossible to attract the young top-dogs, but no other small company can do. People also told me that getting the first employee is very very difficult.

1) They still will skip over it depending on what positions you are hiring for ... at least your first round of hires. Maybe later on if you get a great rep you will be able to swing it but that first round you will get minimum wage quality workers

2) I did not see your plan for the software if this was an in house development or if you were purchasing a software package

If purchasing "easily duplicated" does != cheep licensing is a BITCH with most commercial operating systems and software. While we dont do POS stuff our annual licensing costs are way way way higher then hardware purchases

Software is a hella expensive commodity nowadays

In my original posting is written:

"The next 3 months I’ll go on with doing the analysis of the requirements, user profiles and stuff. 6 to 9 months later I think I’m able to finish a commercial first release.
Asap I’ll start producing a state of the art business plan. IMHO that’s the key of a successful business."

Yep, I'll write it on my own. It's not that difficult, I think in 9 months, 1 year at max it will be finished.

And you're right, the hardware is indeed rather cheap.

In USA it's the same. Most restaurants, I visited, had a POS. But here it's not. About 50% is having one.

Another nice thing is, that countless restaurants are born everyday. :)

I also checked the prices and I was amazed how much they paid for it. I think I can deliver cheaper and offer better quality.

Sorry but, where is "here"?
In Italy, Germany, Switzerland, Austria and Czech Republic POS in reastaurants and business seems to be pretty much a standard to me.

Sorry but, where is "here"?
In Italy, Germany, Switzerland, Austria and Czech Republic POS in reastaurants and business seems to be pretty much a standard to me.

Holland and Belgium. I live in Holland, but close to the border with Belgium.

Sure, many restaurants have POS systems here as well. But not all.
And even if they do, new restaurants are born by dozen every day.

There are several sources were you can detect new businesses before they even enter their buildings.

The competition isn't that hard, there are just a few suppliers.

And…I really I think I can offer more for less.

In my original posting is written:

"The next 3 months I’ll go on with doing the analysis of the requirements, user profiles and stuff. 6 to 9 months later I think I’m able to finish a commercial first release.
Asap I’ll start producing a state of the art business plan. IMHO that’s the key of a successful business."

Yep, I'll write it on my own. It's not that difficult, I think in 9 months, 1 year at max it will be finished.

And you're right, the hardware is indeed rather cheap.

Writing not so difficult. The debugging is painful.
I wish you lots of luck.

My advice? Dump the employee pay-plan. Get an associate when incorporating (go limited or that kind of form). Split the work between you two. Get a secretary when you really need it.

Writing not so difficult. The debugging is painful.
I wish you lots of luck.

My advice? Dump the employee pay-plan. Get an associate when incorporating (go limited or that kind of form). Split the work between you two. Get a secretary when you really need it.

I know already restaurants who want to 'debug' it for me :) Well, they'll test it, it's really needed. A real life test is something different as the comfort of my living room.

Nah, no partner.

Debugging isn't hard, I never make programming mistakes ;)

For young people, just leaving school, the salary isn't such big deal. At that age, adventures are still permitted.

Most of them start at a rather low salary anyway. Their initial salary will be no much lower than what they get in an average bank or insurance company.

I'm aware that at the start, it will be impossible to attract the young top-dogs, but no other small company can do. People also told me that getting the first employee is very very difficult.

I am pretty sure young people leaving school (if the school we are talking about be a university) expect way better then minimum wage.

Many of them see that as a gateway to a higher starting wage. And they shop very exclusively for that. They will simply skip over the job posting and move on.

I know it does not make sense always but lets say I had a job where you could make 40,000 a year but get 20,000 a year in benefits and a job where my salary is 50,000 but I only got 5,000 a year in benefits

I as well as many many people would be drawn to the 50,000 a year job simply because of the higher salary even though I am getting LESS theoretically

Now combine that with the fact that the will be getting a fluctuating bonus that they cant DEPEND on the money for ...
"Sorry cant make the house payment this month ... I know last month was good but the company had to make a few big purchases and that tanked my bonus"

Bonuses are great as a motivator for performance not as a replacement for your wage

I am pretty sure young people leaving school (if the school we are talking about be a university) expect way better then minimum wage.

Many of them see that as a gateway to a higher starting wage. And they shop very exclusively for that. They will simply skip over the job posting and move on.

I know it does not make sense always but lets say I had a job where you could make 40,000 a year but get 20,000 a year in benefits and a job where my salary is 50,000 but I only got 5,000 a year in benefits

I as well as many many people would be drawn to the 50,000 a year job simply because of the higher salary even though I am getting LESS theoretically

Now combine that with the fact that the will be getting a fluctuating bonus that they cant DEPEND on the money for ...
"Sorry cant make the house payment this month ... I know last month was good but the company had to make a few big purchases and that tanked my bonus"

Bonuses are great as a motivator for performance not as a replacement for your wage

No worries. It's a theoretical model.

Maybe, some people will leave the company after 5 or 6 years, hunting for something more secure.

And maybe, I'll find a solution for keeping them with me.
I'm really not looking further than 3 years from now on.

First, I need almost a year to create the software, writing manuals and doing all the other stuff. Then I'll do the sales, installation on my own as long as possible. Employees are for later.

But I was interested in how the people would react to the Semco system. While not that many different people reacted, it seems that most of you do not trust it and are building up resistance. I will take note of this and have to fine tune it. I take in account that Semco is a Brazilian company and Brazil is not Europe.

No worries. It's a theoretical model.

Maybe, some people will leave the company after 5 or 6 years, hunting for something more secure.

And maybe, I'll find a solution for keeping them with me.
I'm really not looking further than 3 years from now on.

First, I need almost a year to create the software, writing manuals and doing all the other stuff. Then I'll do the sales, installation on my own as long as possible. Employees are for later.

But I was interested in how the people would react to the Semco system. While not that many different people reacted, it seems that most of you do not trust it and are building up resistance. I will take note of this and have to fine tune it. I take in account that Semco is a Brazilian company and Brazil is not Europe.
Ah as far as the Semco portion of it goes i dont think it is a BAD system

Now we purposely removed something similar to the "credit bonus" system from our bonuses because we found it un-necessary and not worth it. In the end we did not want to reward simple number of years but also performance

As the company is rather progressive and had frequent and performance based wages and the bonus was a percentage of your quarterly wage, which means bonuses also reflects performance

It works for us (a rather small but growing company)

A commission system could also lead to a company full of egoist bastards.

One could sell too much unneeded stuff to a client, on the short-term it is good for his commission. On the long term it could negatively influence the profit of the company.

To call a big name: ENRON.
profit sharing can lead to lazy long term employees who enjoy the fruits of the newer employee's labor far more than the newer employees do.

commission is a powerful incentive to work hard.

profit sharing can lead to lazy long term employees who enjoy the fruits of the newer employee's labor far more than the newer employees do.

commission is a powerful incentive to work hard.

Commission is often hard to do in IT where they are often not associated with a sale.

Personally we have seen profit sharing work but we also choose not to have it weighted twards length of time there but rather performance.

There are some more complex models that we used to use that work alright including weighting for certification and other performance metrics