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  • Writer's pictureJody Knowles

The Unexpected CEO Blog #2

The Unexpected CEO Jody Knowles Blog #2

I wear my life on my sleeve, and because I do, I like to share my thoughts about managing the 20-year educational publishing business my husband founded and operated until he died in 2023. Taking over an organization with such a profound legacy has been a transformative experience, and I want to use this platform to educate, inspire,  and learn. This lifelong learner embraces the ongoing pursuit of knowledge, even when it’s unexpected.

Rewarding the Team: Lessons Learned and New Approaches

“This is my favorite time of the year!” said no one, ever, about performance reviews, bonus plans, and profit-sharing initiatives.

With 30+ years of human resources experience on my resume, I’ve learned much about the correlation between performance and reward - and the angst that goes along with it. Throughout those formative years, I’d seen many industries and organizations reinvent these processes in a myriad of ways. In my first year as CEO, I took a bold step and reinvented our “profitability” bonus for ScribeConcepts, a strategic move to ensure a more balanced rewards approach.

A Brief History of ScribeConcepts’s HR Evolution

Before stepping into the role of CEO, I’d helped my husband, Chris, bring order to his HR department. He focused on finding talented people, acquiring clients, and the project management magic this organization is known for. Although I’d never received a paycheck from the company (mmm…perhaps a topic for another blog), I played a pivotal role in creating structured people policies that looked forward to the growing company’s future.

One of my first initiatives was to differentiate performance increases from bonus plans and profitability rewards. Early on, Chris, driven by his generous nature, often granted ad-hoc raises and random spot bonuses, leading to inconsistencies and financial strain. This is not a best practice situation, and these acts eventually affected the bottom line, so my mission was to bring order and predictability.

Establishing Clear Policies

Coming in with an HR-first mindset, I started with solid practices: performance increases occur once a year, and any bonus—spot, signing, referral, milestone, retention, or holiday—required policy. Chris initiated a semblance of quarterly profitability bonuses but without definitive guidelines. If the organization brought in a profit during a three-month period, the amount was divided among those who were part of the team. The problem was that Chris sometimes blurred the lines, using performance as a factor to determine how much was doled out to each employee. And his lavish commitment to the staff meant the entire profit pool would be distributed.

Learning from Experience

In 2023, my first year as CEO, ScribeConcepts experienced an exceptional year. By Q2, we were seeing a profit, and I followed Chris's precedent by distributing the entire profit of that quarter, meaning hefty bonuses for staff. While this generosity produced happy team members, it left us financially constrained in Q3, with limited funds for important growth initiatives like new systems, software upgrades, more staff, professional development, and retirement benefits, to name a few.

Upon reflection, I recognized several missteps in those first months, including my own ignorance of what it means to be a CEO and my naive acceptance of misguided advice. One particularly valuable error was treating substantial down payments for future work as immediate profit. This miscalculation underscored the need for a more disciplined rewards approach.

A Balanced Approach to Profit Sharing

Lessons learned later, the “profitability bonus” was clearly defined in 2024: “ScribeConcepts awards quarterly bonuses to employees when funds are available. This bonus is a ‘profitability’ bonus; it is for the entire team because the company—as a whole—did well enough in a quarter to provide each employee with a piece of the profit. This bonus is not a performance-based bonus.” Behind the scenes, this means that we do not include revenue deposited in advance for work we haven’t completed. 

I’m thrilled to say we’ve been profitable again in this year’s Q2. My team is poised to receive substantial bonuses this quarter, but with a crucial difference—we’re not depleting our entire profit. By balancing rewards with reinvestment, we ensure employee satisfaction and sustainable growth.

So maybe I am the first to say, “This is my favorite time of the year!” because I love it when ScribeConcepts makes a profit, and, more importantly, I love rewarding this team.

Coincidentally, this year, I met with each staff member personally to share the profitability news on Chris’s 55th birthday—a particularly sweet occasion, especially due to his penchant for gift-giving. 

Looking Ahead

As we progress, one of my focuses remains on creating an uncomplicated approach to performance reviews using organizational, team, and individual goal setting as a guide. The next blog will define ScribeConcepts’s use of this process as we try something new for 2024–25. I'm excited about these changes, and I can't wait to share them with you!

Stay tuned!

Your feedback and experiences with performance reviews, bonus plans, and profit-sharing initiatives are valuable. Feel free to share your thoughts in the comments. 

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