“Profit-sharing plans that increase efficiency”

The above title appears over an article in the July issue of “System and Modern Business,” a journal published expressly to review and suggest ways and means of running business concerns at a minimum of cost, and, consequently, at a maximum of profit.

The article in question deals with the various co-partnership and bonus systems which have been very successful from the employers’ point of view, taking first the system inaugurated by the late Sir George Livesey at the South Metropolitan Gas Works.

The basis of the South Metropolitan Gas Co.’s system is an agreement with each workman entitling him to a share in the business, and at the same time, security of occupation for a certain period.

When the co-partnership scheme first came into use every man in regular employment was permitted to sign an agreement on the assumption that he was a good man ; but afterwards discretion was used.

The usual period is 12 mcnths, but if a man shows little regard for his work, or is wasteful and neglectful of the Company’s interest, he may find that his agreement is not renewed at the end of the period, or, in some cases, it may be renewed for three, or even six months, to give him an opportunity to improve. If he does not improve he gets no agreement, and his ultimate fate is discharge.

The bonus is paid half in the ordinary shares of the Company and half in cash. Ihe latter is payable at any time at a weeks’ notice, or may be left with the Company at, 3 or 4 percent. interest.

There is, however, a regulation which, to some extent, protects the men from themselves, in that it impresses upon the employees the fact that, while one half is withdrawable, the success of the scheme depends on them saving some part of it ; and in consequence, any employee who regularly draws all his cash moiety will in time find that his agreement is not renewed.

While the cost of carbonising labour to the South Metropolitan Gas Co. was less than the mean of the two other metropolitan companies in 1888, the formation of the Gas Workers Union in the following year caused it to increase until it passed the mean, where it stayed for two years.

In the second year, however, the first co-partnership or “profit sharing” bonus was distributed, and costs fell sufficiently to reduce the excess above mean by two thirds. The following year it dropped well below the mean again, and from that time gradually grew less, until it nearly halved the high cost of labour during the dispute.

In eight years £820,000 was paid for carbonising labour-power, which was £260,000 (or nearly 25 per cent.) less than it cost the two other companies chosen for comparison to make the same quantity of gas.

All this, of course, was not the direct result of co-partnership; but, directly or indirectly, the changed labour conditions had by far the most to do with it.

This very interesting information, coming whence it does, ought to show the working class that the employers, when floating bonus schemes, are not influenced in the least by any philanthropic notions. They are on a good thing and they know it. They sugar coat the pill for the workers to swallow, but the end in view, despite the sweet verbiage under which it is hidden, is always the same, i.e., to increase production and reduce the cost of it.

The co-partnership scheme of Lever Bros., of Port Sunlight, is also reviewed. Mr. W. H. Lever, M.P., who may well claim to be one of the pioneers of “profit-sharing,” holds strong views on this subject.

He held that while in many imdustries wages remained stationary, capital increased output and raised the value of the product, building up colossal fortunes without in any way giving extra remuneration to labour, through which the success of many of the great enterprises was due—to the volume of labour employed without which the money-earning capacity of machinery would have been nil. Profit-sharing was, he thought, the best way of drawing out intelligent labour.

On the initiation of the scheme Mr. Lever invited his new co-partners, who would receive the same rate of wages as before, and work the regular hours, to join hands with him in making the profits of the business sure and increasing. He held up as a motto “Waste not want not,” recommending them to work for the business, aiming at increasing the quantity and quality of the product. When working with machine and tool they should remember that they were handling, economically or otherwise, their own property ! The inefficient worker would cause his fellow co-partners to suffer, as well as his employers.

The foregoing are the salient points of the two schemes mentioned. The workers will find on examination that the underlying motives of co-partnership are always to increase his output, to weed him out like cattle breeders weed out their stock, and to make him more than ever a slave by giving him an infinitesimal holding in the shares of the firm which exploits him—shares which, by the way, he cannot sell, and which he forfeits if he leaves voluntarily.

So you see, fellow workers, that it is not to give that “extra remuneration to labour through which the success of many of the great enterprises was due,” but to make the worker work harder, and to make each man a spy upon his fellow “co-pards,” so that “discrimination may be used” and the inefficient may be weeded out. |

Another great boon is held out to the employee “shareholders” — voting power and eligibility for election as “employee director,” with a seat on the board. It would, indeed, be a picture for a post-card to see the “employee director” at a board meeting demanding a bigger dividend for the “co-pads” who do the work. It would look comical if it happened so, but it does’nt. The “employee director” learns better manners and behaves himself like a good boy.

Let it be clearly understood that co-partnership precludes all possibility of a strike, for, say the employer partners to the employee “partners,” “You aie members of the firm and you cannot strike against yourselves. You must work harder and waste less, and then we can increase your bonus 3d. a week, which bonus you can leave with us at 3 or 4 percent, interest. So, in the course of time, you will get enough to build a house.”

The Socialist dees not regard the intelligent and economical application of brain and muscle as something to be condemned in itself, but he points out that so long as the means of life are owned and controlled by the capitalist class, the application of greater effort is of no avail in the bettering of the material position of the working class as a whole, notwithstanding all the honied words of the apostles of co-partnership and bonus systems.

A. J. G.

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