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Ford’s Profit Sharing Formula: Use Case and Guide

By:
Ryan Shank

Ford Motor Company was founded in 1903 and is one of the leading automobile manufacturers in the world. It has around 173,000 employees and, in 2023, recorded annual revenue of $174.23 billion.

The company shares a percentage of these profits with its employees and has done so for a century, making it one of the pioneers of profit sharing plans.

In this guide, we'll examine Ford's profit sharing plan in detail. We'll take a look at what it is, how it works, and everything else you need to know to decide if profit sharing is the right approach for your company.

What is Ford’s Profit Sharing Plan?

The Ford Profit Sharing Plan involves Ford Motor Company rewarding its employees with a share of the company's annual profits based on the financial performance of the business.

Like other profit sharing plans, it aims to motivate its employees and encourage them to invest in the long-term success of the company.

The plan is one of the oldest of its kind and was originally started in 1914. It just goes to show that Ford has always been looking to take advantage of the latest ideas (not to mention the latest technology) to grow its business.

What employees received from Ford’s profit sharing in 2023

On average, hourly workers at Ford Motor Company received $10,400 in profit sharing bonuses in 2023.

This is an increase from 2022 when workers received $9,176 on average which equated to $1,000 for every $1 billion of profit the company made during that year.

Benefits of Ford's Profit Sharing Program

Some of the many benefits of profit sharing include:

  • Incentivizes staff: Employees become more motivated to work beyond their regular duties as they know they'll benefit directly from the company's financial success.
  • Teamwork and collaboration: It encourages employees to work together toward the collective goal of company profitability. It can also foster a sense of healthy competition which can boost productivity.
  • Sense of ownership: It gives employees a stake in the long-term success of the company as they know they'll be at an advantage if the business thrives.
  • Long-term perspective: Sharing profits makes employees focus on the company's growth and sustainability rather than short-term goals.
  • Continuous development: When employees see that their contributions directly impact their and the company's profits, they're more motivated to seek out ways to continually upgrade their performance.

Want to know how profit sharing could work for your business? Check out ShareWillow’s Profit Sharing Template.

How Does Ford's Profit Sharing Work?

Here's how Ford's Profit Sharing Plan actually works.

Calculating profit sharing amounts

When calculating its profit sharing amounts, Ford multiplies its total North American pre-tax profits by a (unknown) percentage and then divides this number by the total number of employees who are eligible for payments.

The number of hours an eligible employee has worked will also influence how much they receive.

Distribution of profits to employees

Ford will usually pay the profit sharing bonuses to its employees in early March each year as taxable income. Or, it may be paid to an employee as a lump sum when they retire, depending on the type of plan the employee has opted into.

Taxes and other considerations

For businesses in the U.S., profit-sharing contributions aren't subject to Federal Insurance Contributions Act (FICA) taxes and are usually tax-deductible.

For employees, the profit sharing amounts they receive are taxed as income. If the employee receives the full amount spread over several payments, then each payment will be taxed as income.

Who Is Eligible for Ford’s Profit Sharing?

Any Ford employee who has served the company for at least 12 months is eligible to become a profit sharing partner. Until 2023, this only included full-time and part-time employees.

However, temporary employees are also now eligible as long as they've been with Ford for at least three months.

How Ford Employees Feel About the Profit Sharing Plan

In employee reviews on Glassdoor, many employees say that the profit sharing plan is one of the best things about working for Ford. Based on these reviews, it seems likely that the program is having a positive effect on employee motivation, engagement, and retention.

Other Employee Benefits Ford Offers

Some of the other benefits that Ford employees have access to include:

Ford Privilege Scheme

The Ford Privilege Scheme provides substantial discounts on new Ford vehicles to eligible employees.

The scheme gives employees access to discounts on up to five vehicles within a nine-month period and is part of Ford's aim to give employees the best experience possible while working for them.

Ambassador Scheme

The Ambassador Scheme allows employees to nominate friends and family members to receive significant discounts on new Ford vehicles.

 Other Companies Offering Profit Sharing

Here are some examples of other companies with profit sharing plans:

Home Depot

Home Depot's profit sharing plan is called "Success Sharing" and is based upon sales and productivity goals. In 2022, it made payments of around $409 million to eligible employees.

Delta

Delta has one of the most generous profit sharing plans in the U.S. and in 2023 it made a total of $1.4 billion in payments to eligible employees. In its home state of Georgia alone, employees received payments totaling $245 million.

Southwest Airlines

Southwest Airlines' profit sharing plan has been around since 1974 and is still going strong. In 2023, it paid its employees around $118 million in payments.

Get Started With Profit Sharing by Downloading This Free Template

Creating a profit sharing plan for your employees can be complicated and if it's not done the right way, it can lack effectiveness and transparency.

ShareWillow's software uses the latest technology to make it easier than ever to design, customize, and manage your plan.

The user interface helps make your plan accessible to your employees and ensures they know how their payments are calculated, and when they'll receive them.

Get started on your plan today by downloading ShareWillow's Profit Sharing Template.

ABOUT THE AUTHOR

Ryan is the founder of ShareWillow. He's passionate about helping businesses create incentive plans that motivate and reward employees. He previously built and sold PhoneWagon.

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