SHARING PROFITS WITH HIS WORKERS.

Otago Daily Times, Issue 16890, 30 December 1916, Page 8

SHARING PROFITS WITH HIS WORKERS.

"TlUft IS NOT I'iriLANTimoi'Y, l!(!T A BUS.INESS PROPOSITION."

Employees now own over £600,000 worth of co-partnership certificates in Messrs Lever Brothers (Ltd.). Of the company's 0000 odd employees, 3000 are co-partners witli the firm in its undertakings. In tho article below, quoted from System, Kir Wi'l'am Lever states that lie thinks copartnership, as distinct from proiit-sharing, may solve tho labour troubles of the near future in those industries manufacturing anything like a standard product. " The next five years will he the test-ing-time of British industry," t>avs Sir William. "During the past two years I have, in common, no doubt, with hundreds of other employers, given a great deal of careful thought to tho problem of maintaining our present happy relations with Labour, and our increased output after tho close, of hostilities.

"For I Tcalise that our prosperity during the next decade, and the place which our sons will take in the world of commerce, will depend on how we take advantage of the opportunity now given us to set our house in order. A very careful consideration of the question, which has included tho study of many of tho valuable investi«ati</hs conducted by System, has convinced me that, in our industry at least, co-partnership is the ono wav out.

— Responsibility Among tho Workers.— " I think that many schemes of profitsharing and co-partnership have failed bocauso employers have made their men partners only in name. In our works our whole effort is to make them partners in fact as well as in spirit. We have now a series of committees, composed of foremen and workers, which act as miniature boards of directors of the factories. I find that, under this system, co-partnership is developing the sense of responsibility in the men. When they serve on these committees they get a practical working knowledge of tho difficulties of Tunning a business successfully. And inevitably they qualify for the duties of high management.

I look to co-partnership gradually to reduce the burden of responsibility bomo by the present high management—i.e., the chairman and board of directors. When managers, foremen, and employees know that they, are responsible for part of the management of the concern, they will workin quite a different way from mere salary or wage-drawers.

" I fchink that it is impossible to run a business successfully if you keep these men from sharing; in the profits which their industry has created. Nor will they accept or bear successfully a part of the crushing responsibility unless they are paid for doing so. This fact has got to be realised before any organisation can be tuned up to the maximum efficiency.

"It is for this reason that I do not think American employers are right in giving piecework " a place as substitute for profit-sharing and co-partnership. While piecework is perfectly fair to both employer and employee, and while it is useful in many directions, it is not a method which encourages any thought cr interest beyond a day's work. At the same time it is a much less dignified and intelligent method of attempting to secure an employee's interest. A pieceworker employed in manual labour ivpon the rapid performance of an operation may well feel averse to the introduction of an improved method which will quicken and cheapen output if ho is not nersonally to benefit from it. On the contrary, the intelligent co-partner must acknowledge the importance to the business (and consequently to himself) of any improvement which tends to the production of increased profits for everybody. — A Business Proposition.—

It should be admitted that profitsharing will not apply to all classes of employment, such as, for example, say, dock labour, where a worker may be in the employment of two different shipowners in a single day. Nor will it apply in a business like the building trade, where an employer may only permanently retain 25 per cent, of 'his employees, the rest being taken on and dismissed according as his contracts dictate. In such industries some other method of securing the interest of the employee must be adopted. But copartnership can be applied to -all the great standardised industries.

"What we need is the realisation by employers and workers alike that this is not philanthropy, but a business proposition. i regard it as the most practical method of meeting the Labour problems of to-morrow.

— A Psychological Problem. — "Wbat English employers have failed to realise is that the Labour problem is of a psychological and not of an economic nature. Actually there is no Labour problem. Trade unions could easily be a help instead of a hindrance. In themselves they .serve an excellent purpose._ There _is merely a difficult psychological situation to face. The old-fashioned idea that an emp'over should only see his o\\ n people is happily dying out. I do not see any reason why there should be any bad feel in«' against union officials. Indeed, I :hink that it is just as essential for Labour to have a mouthpiece as it is for me to have aii advocate in a court of law. — Restricting Output-.—

" However, there is one point on which I cannot at present forgive the unions— that is, their policy of restricting output. For that policy is based on a vicious principle. To restrict output i.s to impoverish the worker and the nation. " Let us take an instance. Suppose that, with more or less old-fashioned machinery, we can produce one coat, one hat, and one pair" of boots at an outlay of one pound. If by putting in better machinery we can produce two coats, two hats, and two pairs of boots for one pound, obviously the money saved equals onehalf of the total minus interest on the extra outlay on more costly machinery. In other words, the bulk of tho saving effected goes to Labour in the form of wages. The rest of the saving is shared between the conrpanv and the consumer, wll® buys a cheaper article. — High Output and High Wages.— ■ " Labour ought to realise that the prosperity of any nation is absolutely proportionate in these days of standardised production to the amount of its automatic machinery. High wages and power-drive.ii plant so hand in hand. You cannot have the one without the other. _ You cannot pay high wages with a relatively low output. High output means that there are just so many more thousand of every article to be sold abroad or to the workers themselves. The purchasing power of the worker is based finally and inevitably on his productive power. If machinery helps him to make twice as manv articles this year as he did last, there will be just that many more things for tho world to buy and to pay for. " I think that the workers are gradually coming to see this. Co-partnership helps them to realise it. For the mere fact that they are co-partners in the business makes them interested in its working as a whole, as distinct from their own department. — Co-knowledge.—

" Just now, for instance, our workers have, of their own accord, organised a scheme by which co-parlners pay a monthly visit to some other department than their own. In soap-making. as in other industries. the workers used to know nothing whatever about 90 per cent, of the work carricd on under the factory roof.

" A soap boiler, tor example, would know nothing about alkali-making, or wood box-making or printing. Now, however, the copartners not only visit the different departments every month, but they report on what thev see. Better still, they compare notes. Very often a foreman in, say, the cardbox-making department may be able to give a co-partner in the printing department a hint on some problem that has been worrying him. derived from his evil experience. Already some valuable suggestions have been made through this inter-departmental mixing. — The Mental Attitude. —

" But I should like to point out that what is at the root of the difficulty in securing higher production per man in British industry is simply the mental attitude of the workers. I had an old Lancashire erat>lo.yee in my groccry days who

had a saying that amused me. If ho saw a man .slacking lie would go up to him and say, ' Well. Tom, walking about to save funeral expenses?'

"What we need from the, workers is not hurry or rush. Tho present high rati-, of production does not mean that tho workers arc being over-strained. What it means is simply that they are alert, that they are thinking about their work all the time.

"To gel, this higher degree of energy you must bo prepared to pay higher wages.''

— Sir William's Method.—

Sir William Lever, describing his own scheme of proiit-sharing, said : "It was dccidod in 1909 to give the workers a share of the profits secured by tho Lever Company. Accordingly wo created partnership certificates having a nominal face value of half a million, increased since to ono million pounds sterling. An approximate proportion of these certificates, estimated on a basis of 10 per cent, of the salaries or wages involved, was credited to each of the following four classes of employees (1) Directors, (2) managers and foremen, (3) salesmen, (4) general staff. Certificates were issued to each eligible employee equal to 10 per cent, of his calarv or wage. " The plan extendixl to both male and female workers, provided they were 25 years of age, and had been in the service of tho company for five years, and had signed an agreement promising that they will not waste time, labour, materials, or money in tho discharge of their duties, but loyally and faithfully to further tho interests of Lever Brothers (Ltd.), its associated companies, and its co-partners to the best of their skill and ability " These certificates draw dividends amounting to 5 per cent, less than those paid on the company's ordinary shares. In other words, after the ordinary shareholders have received a dividend of 5 per cent., the partnership certificates rank equally with them. — The Lean Years.— "A criticism usually levelled at profitsharing schemes is: How can you make the workers accept the sacrifice of the lean years? I can meet that from our own experience. During the past two years it would have been injudicious for us to declare the usual dividend on Lever Bros. Yet not a single employe has protested against a reduction in his profits. They feel that it is more to their interest to keep the business solid than to grab temporary gains. IF you can once make the employees feel that they are 'in the business' along with you, you can depend on their taking tho long view—which is the business view."