Profit-Sharing: The Les Schwab Model

If there’s one thing every shop owner is struggling with these days, it’s keeping good people. You can teach technical skills, you can coach on sales, but you can’t teach work ethic or pride in ownership — and that’s exactly what too many shops are losing in today’s high-turnover environment.

But what if there was a proven way to build loyalty and drive performance at the same time? A way to make your top people think and act like owners?

That’s exactly what Les Schwab figured out decades ago — and it might be time we revisit his playbook.

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The Power of Ownership Thinking

Les Schwab didn’t just build a tire company; he built a culture. His secret weapon wasn’t advertising or pricing — it was a pay structure that made managers and employees true partners in the success of their store.

Instead of a simple hourly or salary model, Schwab tied pay directly to store profitability. He believed that if you share profits fairly, people will work harder, stay longer, and care more — because it’s their store too.

And he was right. For decades, Les Schwab Tire Centers have been known for exceptional customer service, clean stores, and a culture of hustle — all driven by that sense of ownership.

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How the Original Profit-Sharing System Worked

Les Schwab broke down store profits like this:
• Every store operated as its own business unit.
• At the end of each month, profits were split between the company and the people who ran that store.
• Roughly half of the profits went back to employees and managers — through a mix of trust funds, bonuses, and manager contracts.

Here’s how it roughly looked in Schwab’s “$100 Story”:
• Out of every $100 of store profit, about $15 went into a trust fund for long-term employees.
• Around $10 went into a cash bonus pool for the team.
• Another slice went to the assistant manager.
• And the store manager received roughly 25% of the remaining profit under their personal contract.

By the end, almost half of every dollar earned was shared directly with the team that made it happen.

It wasn’t charity — it was strategy. And it worked. Managers were earning six-figure incomes because they were running profitable operations, not just clocking in. Employees stuck around for years because they were literally invested in the success of the business.

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Why This Matters Today

Fast-forward to today’s labor market:
• Turnover is high.
• Hiring is tough.
• Loyalty feels like a thing of the past.

You can’t buy loyalty with pizza parties or $500 hiring bonuses. But you can build it by giving your people a genuine stake in the outcome.

A profit-sharing structure like Schwab’s turns your best employees into partners. When your store does well, they do well. When profits dip, they feel it too — and they’ll work to turn things around, not just wait for their next paycheck.

That’s how you get long-term commitment. That’s how you keep great managers who treat your business like their own.

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How to Start Implementing Profit-Sharing

You don’t have to replicate Schwab’s exact model to get results. You can start small.

Here’s how:
1. Track Store Profit Monthly.
Before you share profits, you have to know them. Create a simple monthly profit report that includes revenue, costs, and net profit.
2. Define the Pool.
Decide what percentage of profit you’re willing to share — even 10-15% can make a difference.
3. Create Clear, Transparent Rules.
Be upfront about how the pool is calculated and who participates. The key to Schwab’s system was trust.
4. Pay It Out Regularly.
Monthly or quarterly payouts keep it real and motivating.
5. Reinvest for Growth.
Keep part of the profit in the business — just like Schwab did — to fuel expansion and stability.

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The Bottom Line

Les Schwab proved that profit-sharing builds people who think like owners. In today’s environment — where turnover is costly and finding good managers feels impossible — this model might just be the advantage independent tire dealers need.

When you reward hard work with a real share of success, people stop acting like employees and start acting like entrepreneurs. And that’s when your store truly starts to grow.