Three simple premises:
Everybody likes being rewarded for their hard work.
Salary and wage earners tend to get peeved their hard work and success only materially reward the owners and not themselves.
People will work harder for the company if they have reason to feel like they are part of the ownership or at least materially share in the ownership’s success when the company does well.
The “ownership class” if we want to call it that has a major PR problem with workers. American companies have a habit of channeling too much of the profits to owners or shareholders and not giving enough to their employees. At a high level this leads to economic and societal problems when the middle class doesn’t have enough money to splurge on the type of consumer spending that drives our economy. But on a much more concrete level this situation is very dangerous for employers as trends like “quiet quitting” threaten to make corporate freeloading the norm. This is a totally understandable overcorrection to some abused and outdated capitalist norms, but it’s harmful to productivity and overall value generation in a way that can be difficult to fully quantify. The solution seems simple, if unpopular with investors/owners: give the workers their own slice of the profit pie. Create a system where workers in whatever profits ownership chooses to take. It aligns ownership and worker interests nicely.
So what’s an ethical and sustainable business to do? Employee carve-outs that trigger when a company sells and rewards the employees based on the sale price are a solid way to go for a start-up that plans to get big and sell out, but what exponential growth and selling out aren’t the goal? Should a company give every employee a share of its profits annually as a winter bonus? Should profit sharing events trigger to commemorate employee longevity such as every 5 years or similar? How much of the overall profits should go to employees? 20%? 30%? How do you distribute the profits to be shared between the individuals? Does everyone get the same, or is it weighted by salary or position, or performance? Or some composite score that’s a combination of all of the above?
All of the above questions are valid and need to be answered for any particular Extra Quarter company. The answers are NOT going to make everyone happy and there will be perceived winners and losers no matter how fair and transparent you try to make the system. The important thing is that there IS some kind of profit sharing system. It’s not just a way to attract top talent, it helps lift all boats in a consumer-driven economy, and it’s fundamentally the right thing to do.