PROFIT SHARING.

Dominion, Volume 5, Issue 1300, 1 December 1911, Page 2

PROFIT SHARING.

BRITISH BUSINESS MAN DETAILS HIS FIRM'S SCHEME. Till; WOKKEKS' ri'l.l, KEMUNEItATHIN. Dm- (if Hi" ni</sl. interesting inslawcs 'if pnilil. .'linriii); in piwlicc In limit Britain is nflordi-d liy the linn of .1. 'I', i.nrl .1. Tuylw, 1.1 d., )i;itli.y. England, the bend <if which. Mr. T. ('. Taylor, M.IV, | w iliid in . Wellington in a d.ij or two. In tin: course of conversation ivilli ;i representative of (liu Alelbouriio "Am'," from wliieli this is taken, Mr. Taylor explained the. system, iiml outlined I In; histicy of wluit. ho quit.'.: pardonably regards us an experiment o) (i very iniiiorliinl clinrarlei'. "1 ('oiiiiiii:ii(;c(l profit nhiiring with i wnrk-pciiph-," In) Mini; "limn tlift )»..|;ilining of thu your IMI2, in which your J paid out my partners in our linn. Wi l hen employed a rout (iOO permits. 1 lind long desired to find a iniithod of paying work-people- which would give (hem an opportunity of sharing good limes without involving tho employer in lind times in paying impussiljlo wage?. 1 recomincnd tho system we have adopted as tho Best Means Known to mo of Paying the Dest Wages one run afford, and at t)io sain© timo vitally interesting ono's co-workers in an industry and its well-being. My system is not original, being based largely on French models, particularly on that o. the great Jlaison Godin. It goes further than mere profit sharing, because we a. low our labour tonuses to take tho shape of new shares in the capital of the com pany, a distinctive feature of the Godin method. Sly desire all along has been to put the work-peoplo in the position of capitalists, and to unify to tho utmos l possible extent the forces of capital and labour. I'or the tirst year we gave shares in tho profits to the "managers only, but distinctly on the understanding limt it was my intention to extend it later to tho whole of the work-people also. The managers were paid in cash, but since 1594 all the workers who have been with the firm a whole calendar year participate in nil the profits, on the same sys torn, beyond certain interest on capital. In the second year I extended the system to the foremen, and in tho fourth year I tool; in the whole of our work-people, by allotting them shares-of .£l, J2, or more, as the case might he, by way of u beginning, as the results for that year (1895) warranted. To do this it was necessary to convert the concern into a limited liability compnuv. "Briefly," continued Mr. Tavlor, "the scheme is that out of tho profits of the year there is apportioned, first •of all, 5 per cent, on all tho capital of tho concern. After this has been paid labour participates at the same rate per cent, as a further dividend on capital. vTlms, if (ho capital be .£120,000 and the total sum paid for wages ho .£BO.OOO, and tho profits amount to .£16,000, then there is first paid .X'GOOO as beiiiij the 5 per cent, interest on .£120,000 capital. The remaining .£IO,OOO is spread as a dividend over both the .£BO,OOO wages and the .£120.000 capital. This would mean a further dividend on capital of 5 per cent, and a bonus on wages of 5 per cent. The transaction thus yields a total dividend of 10 per cent, to labour. The labour bonus payable in respect of workers who have been with us only portions of tho year is set aside as a workers' benefit fund, and applied in various ways exclusively for their benefit. Hut to all who have been with us tho whole year the labour bonus is Allotted Individually in £1 Fully Paid Shares which, of course, participate in f'uturo cash dividends on the same principle as nil the rest of the capital. Down to the present, as our business has been a steadily growing one,we have been able legitimately to issue fresh shares every ; year as our capital has increased. But no douht a time will come" when it will not be expedient to increase the size of our business or its capital account. Tho alternative beforo us will be either to pay the labour bonus in cash or" that I should sell my shares back to tho concern for allotment as labour bonus. ■ There is, however, another possiblo course, and that would be the devising flf 60ine ■ scheme, say, a building society or some other kind of investment, in which tho people's lahour bonus should be invested. That, however, is a matter for tho future. It heed hardly be said that wo pay as large wages as any of our competitors, recognising the standard rate of wages in the district. The shares allotted to tho workers do not carry votes, but they do carry the same dividends and the same future participation in the assets of the company, should it come to be wound up, as iny shares do. I should not call it profit sharing to keep back anything from wages for tho purpose of declaring a dividend. A bonus under such a system would be fictitio is and unreal. It should be clearly understood that the OSSOUCO of the system we havo adopted is the granting of money out of tho income which would otherwise go to the employer or capitalist. Our shares may not bo transferred to people outside the company, but as a few of our employees used to sell their shares as soon as they received them, three years ago we stopped that practice. At the same time we raised tho rale of interest from i\ per cent, to 5 per cent., and doubled tho labour bonus to all employees of. 21 years of age who had been five years with the company, and who held shares amounting to half a year's wages. "I don't put this or anything else forward," added -Mr. Taylor, in conclusion. "as a panacea for all evil; but I do hold that the system is Applicable to Any Kind of Employment in which capital and wage-earners play n joint part. The groat feature of its adaptability is that capital and labour are remunerated in proportion to the. relative extent of their employment. Our business now employs nbout 1400 workpeople. We have the happiest relations with our employees. 1 don't say that this principle will make a had business a good one, but most certainly if applied in good faith it cannot fair to make a good business a better one."