Pride in Performance: Keep It Going!

4 ideas

1. Prineville Tyre Shop Built on Shared Profits

   In 1952 Les Schwab put about $3,500 of his own money, plus borrowed funds, into buying a small OK Rubber Welders tyre shop in Prineville, Oregon. He multiplied its sales within the first year. Instead of hiring outside managers as he opened more stores, he gave each store manager a large share of that store's own profits, eventually making them partners. The chain grew to hundreds of stores across the western US while keeping this profit-sharing structure, which makes it a concrete test case for whether shared ownership outperforms salaried management.

2. Store-Level Profit Sharing Aligns Local Effort

   This ties every local decision about service, staffing, waste and pricing to a number the manager can see and directly influence. Because the manager keeps a real share of what the store earns, they act like an owner without needing supervision from headquarters.

3. Promote Owners From Within, Never Hire Them

   Schwab argues that store managers should come up from the tire-changing floor rather than be recruited from outside. People who have done the work understand the business and the culture. They have also seen for themselves that the profit-sharing promise is real, so the prospect of one day running a store motivates everyone below them. Hiring from within keeps the path to ownership credible, and that credibility is what makes the incentive work.

4. Generosity to Employees as Growth Engine

   Schwab treats giving employees a large share of profits as the thing that drives growth, not as a cost that eats into it. Motivated owner-operators deliver the fast, eager service customers remember, such as staff running out to greet cars. That service increases sales, which enlarges the profit pool being shared. Seen this way, the question 'how little can I pay?' becomes 'how much can I share so the pie grows faster than my slice shrinks?'

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