CO-PARTNERSHIP.

Hawera & Normanby Star, Volume LXXI, Issue LXII, 10 May 1912, Page 2

CO-PARTNERSHIP.

REMEDY FOF LABOR TROUBLES.

A SYDNEY FIRM'S EXPERIMENT.

Mr James A. Murdoch, of the firm of Murdoch, in Park street, Sydney, is an i enthusiast in what Earl Grey terms "the man-child of the present indusr trial movement." Chatting with a Sunday Times representative recently, Mr Murdoch said: "I, read with interest yoar article in the Sunday Times the other week, and I believe the sentiments expressed therein to lie absolutely true. "1 realised it years ago. We have always endeavored to reward interest on the part of our employees on behalf of the firm, and for a long time we stuck to the system of cash bonuses. At the end of the year it was my custom to carefully examine a man's record, and by that means I could arrive at what he had been worth to us in the year. 'So-and-so has practically earned £1 a week more than he was paid. Right! The money shall be made up to him.' I would write him a cheque for £50 and present it to him as a Christmas box. "I was never satisfied with this, however, as I realised it did not create the real interest in a business which the successful salesman should have. Then I arrived at a scheme of co-partnership Why not allow that man to invest his bonus in the company? Here then is 1 the scheme that I evolved: 1 "The arbitration awards fix a minimum salary—£2 12s 6d a »reek —for aciuit salesmen. We pay that, and frequAntlv more, to good men. At the «nd of th« year 1 still observe my old retrospective custom of checking the man's record to see whether he has earned more than his salary. If so I put it to him—'Will you have a cheque for the money, or will you invest it in the company aljd take shares?' In the raajoz'ity of cases the answer is an instant 'Yes.' Shares in this firm bear a face value of £1, but to give our employees a bigger interest we issue special employees' shares to them, which have the face value of 4s. These shares, however, for dividend purposes, have an equal value with the ordinary shares. That is to say, an employee who holds £20 worth of employees' | shares draws dividends, pound for : pound with my own, on £100, or five times as much as the face value of his shares. Let me give you an example. One of my men has earned, in my opinion, 7s 6d per week more than I have been paying him. I offer him £20 or £20 worth of employees' shares. He takes the latter. At the end of the next year, we will say, we declare a dividend of 15 per cent. Considering the fact that .his hundred shares at 4s are equal to .my ordinary shares at £1 each, he dr&ws in dividends at the end of the year-£ls. "He can take that money or he can take a step further in my system. If [he wants to put his dividend money back into the business, he is at libeity to take up £15 worth of ordinary stock, that is at £1 per share —with this proviso: Our shares are not on the market. If that employee left our services he must sell his ordinary stock back to us at the rg&e at which he bought it. But to compensate him we give him a pro rata sh,ara in the money for the year in which he relinquishes his stock, which was being carried to the reserve fund. Supposing we were carrying over £2000 to the reserve. He would get a pro rata amount of this according to the number of ordinary shares that he wished to sell bacfc to us. That should be clear. But. do not miss this point: We have allowed him tP invest his dividends in ordinary share 3. He may have, during the past year, evinced suc.fi a lively interest in the business that we consider he is entitled to a further bonus of £10. T.hjs ha may lift ov he may take its equivalent in employees' shares again. All this is to say that at the end of two years from the time he joined us, he will have in the company the equivalent of £165, earning him interest at the rate of, say, 15 per cent. "That man came to us without capital at all. We have created for him in two years £185, all of which he has invested in a good paying concern. The bonus system does not go on for ever; The man is at length receiving, per medium of his dividends, added to the minimum salary of his grade, what we term the actual worth of his labors. His dividends, of course, are still going on, and we allow him to invest them in ordinary shares. "One other feature concludes the scheme as it is at present. Suppose \ve; wish to expand our business. Each of our men is receiving a living wage and a fair bit over. It he be a provident I man he will surely have saved a little money. We invite him to put the money into the business by taking up ordinary , stofck at its face value, £1 per share. "That is the scheme. I tnink it is a good one." "Does it work well?" "Yes." ""It sounds philanthropic." "There you are wrong. It is not philanthrophy. We are not a benevolent institution, but a business house, and our co-operative scheme is a busi- j ness one. The man realises that 4s! only represents the earning value of j £1 while he remains with the firm. As soon as he leaves it he can only realise the face value of his stock from us, and whereas his money might have represented the earning capacity of £200, in reality he can only realise £40 in ready cash on it." "You are convinced that the scheme is a cure for labor troubles?" ' 'I am; and what is more, I say that the sooner the unions take it into account and support the principles of co-partnership, the sooner they will be. doing for their members what they are supposed to be doing, securing for them the full return for their Indus-' try." "The moral side of it is good?" "Excellent. The man is taught to be provident, and at the end of ten years should be able to realise sufficient money to start in business for himself."