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DreamHost’s unique profit-sharing system results in high morale, strong retention
Employee ownership providing employees with strong incentives

DreamHost, a Southern California-based web-hosting company, is utilizing a profit-sharing system that comes at a price no employee can refuse — free.

And the system is proving to be effective at achieving its missions of building strong employee morale and keeping the turnover rate low, says Dallas Kashuba, one of DreamHost’s four managing partners.

After employees have been with the company a year they are issued “units,” which are DreamHost’s equivalent of stock options.

At first, the units are worth virtually nothing, however, the longer an employee stays with the company, the more the value of the units increases, Kashuba explains.

Every year employees are issued additional units based upon how long they’ve been with DreamHost. As the company grows, the older units gain more value in what Kashuba describes as a “snowball effect.”

Then, at the end of every quarter, employees are issued profit-sharing cheques.

“We give out quarterly profit-sharing to give people a little more of a financial incentive and to try to keep things efficient and (give employees) a little more stake in making sure things are running well,” says Kashuba.

DreamHost began this system not long after the company was established by Kashuba and three partners in 1997.

From the get-go, the managing partners, or “head honchos” as they’re affectionately known, wanted to establish a system where employees would have a stake in ownership.

“That’s good for employees because it gives them a direct incentive to really excel at their jobs, because when the company does well, they do well,” says nine-year employee Brett Dunst, who is one of DreamHost’s original profit-sharers.

“I think it gives people a sense of pride and a sense of ownership in the company’s activities.”

Keeping employees happy with their jobs is important in an industry where it can be difficult to hire people.

Kashuba says DreamHost’s retention rate is high compared to other web-hosting services who hire large numbers of tech-support staff.

“Tech support, in general, is a very difficult job to staff (but) most of our people stick around for a few years,” he says.

DreamHost is one of 25 international companies named to the WorldBlu List of Most Democratic Workplaces for 2008.

WorldBlu is an Atlanta-based company specializing in organizational democracy.

More information on DreamHost can be found on the company’s website www.dreamhost.com.

More information on WorldBlu can be found at www.worldblu.com.

— More to come

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