A small business owner from Philadelphia called into the “EntreLeadership” podcast recently to ask personal finance personality and business coach Dave Ramsey for advice. The caller, Mike, runs a $15 million-a-year industrial distribution company with just 16 employees, many of whom have been with the business for decades.
The company, family-owned for generations, has always distributed 100% of its profits at year-end between ownership and employees. For some, this bonus had become expected. But after a rough year with reduced profits, the company scaled back those payments.
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It’s a practice that was passed down to him, Mike explained. “But it’s harder and harder to make that work. We had to step that down due to a tough year.”
The result? Backlash, especially from longtime employees. One even threatened to quit if the company ever paid less again. “If you ever do that again, I’ll walk out,” the employee told Mike.
Ramsey was stern. He even called the disgruntled employee “entitled little twerp.” “That’s the last conversation I have with that person,” he said. “You don’t freaking threaten me. I own this. You are confused.”
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Ramsey said the employee should’ve been fired immediately and called the attitude a result of poor leadership communication. “This is entitlement. It’s arrogance,” he said. “When I allow somebody to become entitled to something they’re not entitled to, I have done a poor job of communicating this.”
According to Ramsey, the mistake was framing the bonuses as a guarantee instead of what they truly were—profit-sharing based on available earnings. “We are sharing what our family owns with you. We are not obligated to give it to you,” he said. “But we have chosen, as an act of kindness, to share with the people that run the business with us.”
He stressed the need for crystal-clear expectations. At Ramsey Solutions, he said, they remind employees monthly that profits only happen when “revenues go up and expenses go down.”
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Ramsey urged Mike to reframe the conversation with employees and reinforce that bonuses are a gift, not a promise. “If we’re not making any money, we did this together, boys and girls. We either went up together or we went down together.”
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