IG’s Peace Blog

Peace and its many aspects

Thoughts on profit sharing

The general strike where I live is basically over (some companies are still dragging their feet on signing the final agreement).  However, it went on for something like 44 days and had a big impact on life here.  While most feel the strike was justified, there was a lot of disruption, hard feelings and probably lasting negative effects.  This got me thinking about what the underlying dynamics are in a situation like this.

One of the most obvious is the “us and them” effect: in this case the conflict and opposition between “capital” and “labor”, “owners” and “workers”.  The leftist tradition argues that this is inevitable, however, I don’t think this is the case.  It seems to me there are ways to overcome this division.  Consider for instance, the idea of profit sharing.

“Profit sharing refers to the process whereby companies distribute a portion of their profits to their employees. Profit-sharing plans are well established in American business. The annual U.S. Chamber of Commerce Employee Benefits Survey indicates that somewhere between 19 and 23 percent of U.S. companies have offered some form of profit sharing since 1963. Other estimates place the number of companies offering profit-sharing plans in the 1990s somewhere between one-fourth and one-third of all U.S. firms. For small businesses, profit sharing provides an important means of increasing employee loyalty and tying employee compensation to company performance. Profit sharing is a particularly attractive option for newer small businesses with uncertain profit levels, as it allows business owners to share the wealth during good times without obligating them to do so during lean years.”

While this is, no doubt, a fairly complex and technical subject, the basic point is clear:  if workers become part owners, then the “divide” between them and owners is no longer so clear, and the motivation of workers changes since they are no longer just working for wages, but for the overall progress of the firm.

Of course, the longer term solution is for everybody concerned to see only “us” in a given firm, and for the organizations of both workers and owners (and the government) to see only “us” in the economy; but that depends on all involved feeling they are being treated fairly, and that in turns depends on those with power eschewing short term profits over longer term profitablity.  So, once again, it comes down to values (doesn’t it always).

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March 19, 2009 - Posted by | Uncategorized | , ,

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