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84 HASKINS & SELLS November Some Successes and Failures In Profit Sharing PROFIT-SHARING has been sug-gested as the panacea for ailments growing out of the relations between the capital and labor groups in industry. Would the recent strikes of the printers, expressmen, longshoremen and laundry workers have been prevented had the employers introduced some system of profit-sharing? Would the strike in the steel mills have been averted had the administration of the United States Steel Corporation, instead of giving its employes frequent and liberal increases in wages and the opportunity to buy the common stock of the company at somewhat less than the current market price, instituted some plan whereby the workers would have shared, as such, in the profits? The value of profit-sharing as a remedy may perhaps be better judged after a consideration of its object and history and some of the instances wherein it has either succeeded or failed. Profit-sharing is that plan wherein the worker receives, in addition to his wage, a share, determined in advance, of the profits. It is not specifically related to the wage system, which aims to increase the compensation of the worker as he increases production and thereby reduces cost, or which allows him a share in the saving representing the difference between a standard time and his actual time, when the latter is shorter. It has nothing to do with the Differential Rate Plan used by Taylor or the Individual Effort System originated by Harrington Emerson, which achieved such publicity through its application in the shops of the Santa Fe Railroad that it is frequently referred to as the Santa Fe System. All these schemes are limited to and affected by the labor operations and the relation of production to labor costs and overhead. Profit-sharing takes no specific cognizance of the part which the individual plays in the result. It is assumed, however, that the hope of sharing in a profitable result will serve as the necessary incentive to each individual and spur him on to constant effort to the end that the result may be as large as possible. If the employe receives a gift at Christmas time, or at the end of the year, it is a bonus and not profit-sharing. It is something which results from the generosity of the employer and may depend upon his mood. Under a profit-sharing scheme the share may depend upon the generosity of the employer, but it is fixed in advance, thus constituting a right which is conferred upon the worker, and is something to which he may look forward. It is probable that he might enforce such right at law. The profit to which reference is made is the net profit. Such profit is that which remains after deducting all selling, administrative and financial expenses. In short, it is that profit which is available for distribution after taking out all applicable costs and expenses; that residue which, ordinarily, if it were not distributed as dividends would pass to surplus. This interpretation has been modified in various instances in that interest on investment has in some cases been charged before the determination of the amount subject to distribution among the members of the proprietary group and the manual workers. To trace the history of profit-sharing would be to trace the history of capital and labor in enterprise. Writers usually agree that profit-sharing in a broad sense must have had its origin in remote antiquity. The earliest reference to its existence in concrete form is in the time
Some successes and failures in profit sharing
Profit-sharing -- History
Henry Brigg, Son & Co.
Procter & Gamble Co.
N. O. Nelson Manufacturing Co.
Haskins & Sells Bulletin, Vol. 02, no. 11 (1919 November 15), p. 84-87
Haskins & Sells Bulletin, Vol. 02, no. 12 (1919 December 15), p. 90-94
Haskins & Sells Bulletin, Vol. 03, no. 01 (1920 January 15), p. 02-05
|Source||Originally published by: Haskins & Sells|
|Collection||Deloitte Digital Collection|
|Digital Publisher||University of Mississippi Libraries. Accounting Collection|
|Identifier||HS Bulletin 2-p84|