MSPs: Switching From Bonuses to Open Book Profit Sharing?

Nick Bock, CEO of Five Nines Technology Group, is opening his financial books to his employees. And at the same time, Five Nines has shifted from traditional bonus plans to a company profit sharing plan. The results sound promising. And Bock sounds pretty upbeat about his managed services business for 2011. Here’s why.

By shifting from a traditional bonus plan to a profit sharing plan, all employees are now trying to influence company sales and profits in the right direction, says Bock. A prime example: Technology engineers motivate the sales team to pursue higher-margin IT projects and business engagements, rather than competing all the time on price.

At the same time, an open book policy gives employees a better feel for the company’s performance — and the impact travel, IT investments and other expenses can have on a company’s profit margins. The net result: All of Five Nines’ employees play a role in company profits — and it sounds like company profits set a record in 2010.

I certainly hearing from more and more MSPs that use an open book financial policy. The topic also generated healthy discussion on MSPmentor about a year ago.

Despite the promise of open book financial policies and company profit sharing, I can see some potential downsides. In particular, if you’ve got a true rain maker on your staff I’m not sure why that person would want to potentially work in a cross-company profit sharing model. Or to put it more bluntly: Sometimes stars want to earn top dollar. Period.

Still, a company-wide profit sharing model sounds like it’s working quite well over at Five Nines.

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