PROFIT SHARING.

Auckland Star, Volume LVI, Issue 292, 10 December 1925, Page 9

PROFIT SHARING.

VIEWS OF BUSINESS HEAD. PRACTICAL EXPERIENCE. i CHAMBER OF COMMERCE - DISCUSSION. At the last monthly meeting of the , Auckland Chamber of Commerce, Mr. ;H. W. Hudson, managing-director of L. D. Nathan and Company, and a past- , [ president of the Associated Chambers of ■ Commerce, commenced an address upon '. profit sharing. Mr. Hudson stated at t i the outset that the scope of his sub- . ject would demand its being spread over ; two sessions. His remarks at that ' . time were summarised in our issue of j . November 12. Continuing to-day, Mr. | Hudson submitted the following sum- i , mary of his general conclusions: — I [ 1. That an employer is justlp entitled , (a) to reasonable remuneration ioi|his | . personal services; (b) to a fair rate of I ; interest upon capital invested; (c) to , require that the stability of his busi- I ; ness shall not be jeopardised by the i . premature with drawal of surplus pro- j [ fits necessary for developmental pur- : -, poses, or to meet possible future losses, j i 2. That tension existing between capi--1 tal and labour is chiefly due to a belief ' ; (sedulously foetered by professional agi- . tators) that the disparity between the remuneration paid to wage-earners, and i that received by the employer is excest sive; and, secondly, to an altogether | ; commendable anxiety on the part of the : more responsible wage-earner for the | s future of himself and his dependents in - the event of his own invalidity or death. 3. That so far from such an unfair disparity between the rule, there is rea- ! son to believe that were a census of - our own. industrial ventures taken upon • the lines of the United States ComI mission's report of 1917 a very similar , position would probably be disclosed, , i.e., 25 per cent would show no margin ; for interest on capital invested, after ; payment of a reasonable remuneration i for the employer's personal services; 25 j per cent wouldb arely earn a commercial | j rate of interest in addition, and a I i further 25 per cent would perhaps be f able to make only reasonable provision - against contingencies. | i 4. That however advisable it may be - for obvious reasons to formally negative such a suggestion, it must be admitted t that in effect capital and labour—the I two prime factors in industry—are ' interdependent partners, upon whose ; harmonious co-operation the welfare of ) the community depends, i 5. That even if the industrial position be only approximately a s suggested, and ' the relationship between the parties as. • defined be accepted, it should be obvious that a full disclosure to a staff of an 1 employer's true position would effectu- " ally discredit the agitator, and, if coupled with an expressed willingDess ' to share exceptional prosperity in a definite agreed-upon proportion 'by way I of provision for a superannuation allowance, would go far to remove the present misunderstanding. 6. That in the absence of specific provision to the contrary, the normal i agreement for personal service in return ' for wages is a definite contract complete I in itself, and implies no legal or moral ■ obligion on the part of an employer to ; supplement such payment in excess of ; the agreed-upon rate. 7. That notwithstanding attempts of ! self-appointed champions of the wage--1 earner to read into the contract for ser- ' vice such moral obligation upon the part ' of the employer, it would be well worth ] ' the latters while in the interests of | ' t industrial harmony and efficiency, to j' I (under proper safeguards) voluntarily j follow the course indicated in para- | graph 5. I 8. That the only known methods avail- > able for creating the atmosphere of , complete confidence between the parties, [ essential in the successful formulation . of a staff superannuation fund based ( - upon an agreed-upon proportion of the | profits of an undertaking, are—co-part- . nership and profit-sharing (as the latter • term is usually understood). 9. That for the purpose in view "pro- • fit-sharing" is preferable to "co-partner-ship," by reason of its more general suitability to the immediate needs of the wage-earner, and its greater i elasticity and simplicity in application. I 10. That the liberality of the provision,' made will be the determining factor in the success of a proposal, and upon the measure of recourse retained by the employer against an allotment for con- ; tribution towards unforeseen future i losses, will depend on the proportion of profits which he can afford to set apart I without infringement of the conditions r laid down in paragraph 1. . It only remained for him to cay that • after three years of prosperity, two of • losses and three of recovery, his board i had demonstrated the possibility of i formulating a staff superannuation fund . complying with all the conditions just ! enumerated, and which, whilst amply • fulfilling the purpose for which it was • devised, would leave the employer's pre- j 1 rogative unimpaired, would entail no I undue sacrifice on his part, would safe- ' guard his business against depletion of '■ developmental capital by premature distribution of surplus profits, and would | 1 yet, within the earning capacity of a I ! business, ensure adequate provision for " loyal and competent servants upon their retirement. : In a discussion, which ensued, Mr. Hudson explained the full details of the ' scheme adopted by his firm, and added j ! that he would not go back to the old i lines of working "for all the tea in ' China." He stated that the failure of most profit-sharing schemes had been ! due to the employees' credits being paid ' out in cash. The greatest care had to ! be taken to ensure that apparent profits were not merely temporary gains. The share of profits allotted to employees had to be held in suspense for a period as a guarantee against subsequent losses.