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When business leaders complain that the enterprise lacks talent and cannot recruit talent, they must first understand one issue: the enterprise may not lack talent, but rather the mechanism to produce talent. How to motivate employees to work with more enthusiasm and creativity has always been a pursuit of small and medium-sized enterprises. As a mechanism for incentive and value orientation, how should enterprise managers design a reasonable distribution system?

1. Wealth Creation Mechanism (Distribution Mechanism – Core Mechanism, Must Be Formulated by the Boss Leading Shareholders and Middle and Senior Management)

Let's first look at four phenomena:

  1. Why could Qin Shi Huang unify the six states and become the first emperor? Because he adopted the farming and occupation mechanism, i.e., for every ten mu of land seized, three mu were given to soldiers; for killing one person, ten yuan was rewarded.
  2. Why could Chinese farmers have enough to eat and wear after the reform and opening up? Because farmers used to work for the production team, but now they work for themselves.
  3. Why do our bosses, despite little external support, still work from dawn to dusk without complaint? Because the boss is making money for himself.
  4. Why can employees work day and night, forget to eat and sleep, be obsessed, and go all out? Because they are acting for their dreams and fighting for honor.

"Operating a business is operating people; operating people is grasping human nature, and then satisfying human nature!"

"The boss is a match, employees are gasoline; when the match meets gasoline, energy explodes."

Demonstration 1: Incremental Distribution Mechanism

  1. Problem: Production or sales are hard to increase; the boss wants it badly, but employees don't.
  2. Principle: Employees only put in normal effort for normal income. To get them to work exceptionally, they must receive exceptional rewards.
  3. Specific Operation: Set a production or sales baseline, then distribute the excess portion to the parties involved according to a certain proportion.
  4. Notes:
  1. The portion given to employees should preferably be more than 50% of the net profit of the excess;
  2. If possible, distribute daily; at the very least, monthly;
  3. This mechanism suits all enterprises;
  4. The boss must enlarge his heart.

Demonstration 2: Reduction Distribution Mechanism

  1. Problem: Production costs and operating costs are hard to reduce.
  2. Principle: People only care about things related to them.
  3. Specific Operation:
  1. Set a cost baseline, then take 50% of the monthly reduction and distribute it to the parties involved according to a certain proportion.
  2. Set a personnel baseline for a department, let internal competition eliminate the weak, and give half of the saved base salary to those who remain.
  3. For reduction distribution mechanisms, for newly opened companies, set a break-even period, then distribute 50% of the reduced loss portion to the team.
  1. Notes:
  1. At least half of the reduction should be given to employees;
  2. This mechanism suits all enterprises.

Through these two mechanisms, we understand: in our enterprise, it's not that we lack talent, but that we lack the mechanism to produce talent.

Demonstration 3: Lottery-Style Distribution Mechanism Why is the lottery so popular?

  1. Because you can win big with a small stake;
  2. The redemption process is simple;
  3. Immediate payment.

Problem: Excellent employees don't feel a sense of excellence in the company, so they stop being excellent or switch jobs. Principle: Excellent employees hope to use their outstanding intelligence to get exceptional returns, thus remaining excellent.

Operation 1: Set a standard on performance, and reward the first place who achieves that standard in the month with an exceptionally large prize (at least 5-10 times the regular income).

Operating people: grasp human nature, use mechanisms to control human nature.

Pyramid Principle

Operation 2: Each month, select the first place in technology or service, give a big prize, and use the master-apprentice culture to make them sacred.

Operation 3: Establish a golden idea project – that is, set up big awards in process flow, technological innovation, etc. That is, after someone proposes a suggestion in these areas, an expert group discusses whether it can be implemented and assigns someone to follow up on the implementation effect. Finally, distribute 10%-30% of the net profit generated from this to the proposer.

Notes:

  1. The awards set must be ones that excellent employees feel are worth fighting for.
  2. This mechanism suits all enterprises.
  3. Immediate payment.

Demonstration 4: Welfare Distribution Mechanism

  1. Problem: When company performance rises, administrative and logistics staff feel unfair.
  2. Principle: If it's related to them, they no longer complain but proactively pay attention.
  3. Specific Operation:
  1. Conduct ideological education;
  2. Set a performance target, and distribute 0.1% of the excess portion to administrative and logistics staff according to a certain proportion.
  3. Give parenting awards to the parents of excellent administrative and logistics staff;
  4. On employees' birthdays, send gifts to their parents;
  5. When employees win awards, send the prizes to their homes with great fanfare;
  6. Invite the parents of excellent employees to the company's annual meeting and use the three cultures.

Demonstration 5: Mortgage-Style Distribution Mechanism

  1. Problem: Excellent employees are prone to resign before they can take charge independently.
  2. Principle: People hope to use future chips to exchange for today's returns.
  3. Specific Operation:
  1. Buy them a car or a house, promising that if they work at the company for 5 years, the car or house will be transferred to their name.
  2. Promise that if they work at the company for 3 years, they can get an extra year's annual salary.
  3. If they work for three years and can take charge independently, open a store for them, and they will hold 30% of the shares; those who invest money can get more.
  4. Promise that if they work for ten years, the company will provide a car worth 50,000 yuan.

Demonstration 6: Marriage-Style Distribution Mechanism

  1. Problem: When old employees or relatives can take charge independently but don't get the benefits they deserve, they will have a negative effect in the company.
  2. Principle: Employees who can take charge independently hope for a stable and face-saving future.
  3. Specific Operation: Four-level shareholder system (including employees and relatives) A. Performance shareholders (service shareholders) – become shareholders due to excellent performance or service; B. Auxiliary shareholders – can work in a certain area of the company and take charge independently; C. Leading shareholders – can play a leading role in the overall operation of the company; D. Independent shareholders – can independently operate a company.

Notes:

  1. Each level must have entry and exit mechanisms defined in advance, with clear terms in writing and signed (including for relatives);
  2. Outsiders should preferably invest money to participate, while relatives should preferably not invest money.

Mechanisms are set according to opportunities.

  1. Before setting mechanisms, the boss must create a field. The core of speaking is to make people understand and be touched. The biggest drawback of enterprises is that the boss doesn't understand management thinking and always wants to manage people well.

The boss must become a coach.

  1. Employees can only do what they can do; they can never do what the boss can do.
  2. The exit and share reduction mechanisms must be clearly written.
  3. A three-level talent incubation method must be used for talent reserve.

The three things the boss should do:

  1. Find industries or products that our industry can do in the future.
  2. Find the momentum for the future development of the enterprise.
  3. Find resources.

Entry Mechanism For example: from non-shareholder to performance shareholder.

  1. Work as an operations manager or supervisor for more than one year;
  2. The team's performance under their responsibility in the previous year ranks no lower than the top 30% of teams;
  3. For logistics: within one year, based on market-oriented assessment, the average score is not lower than the top three;
  4. The previous year's personal performance is not lower than the top 10% of the team, e.g., not lower than the top 10;
  5. The thought and soul must be consistent with the team.
  6. More than 60% of original shareholders agree.

Demonstration: Share Reduction and Exit Mechanism For example: Leading shareholder's share reduction and exit mechanism

  1. Those who exit midway only enjoy the current year's profit distribution; the capital contribution is not refunded.
  2. If they can no longer take charge independently, the shareholder pays out of pocket to hire someone who can do the job to replace them, and goes to study for two years. During this period, profit distribution is not affected. If after two years they still cannot keep up, shares will be reduced as appropriate.
  3. If the shareholder cannot work for the company due to force majeure, the shares will be disposed of in the following three ways: A. Internal transfer at market value; B. If internal transfer is not possible, transfer to a natural person, but with the consent of 60% of original shareholders; C. Diluted gradually over the years of cooperation. All shareholders must fill in the "Share Beneficiary" declaration and file it with the company. The disposal method of this shareholder's shares is the same as the third clause.

The distribution mechanism is the core mechanism of a company, mainly determined by the boss and middle and senior management. Before formulating the enterprise distribution system, the boss and middle and senior management must clarify:

  1. What is enterprise value;
  2. Who creates value; only the creators of value have the right to share value;
  3. How to evaluate value; the evaluation principle reflects the enterprise's value orientation and development strategy, and it determines the direction in which the enterprise requires each value creator to strive;
  4. How to distribute value, balancing external fairness, internal fairness, and self-fairness. Only by solving these four problems can the incentive effect of the distribution system be truly realized.

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