BENEATH THE SURFACE Profit Sharing, an Employee Magnet I have spent a fair bit of time and space in this magazine discussing how to address the shortage of quality employees, where to find them, how to incentivize them and how to retain them. We know that top quality people seek a variety of ways to be rewarded for their efforts, not all of which are directly related to financial benefits, but let’s not downplay the importance of that essential. It’s all well and good to talk about the attractiveness of the work environment, flexible schedules, feeling valued, being made a part of the decision-making process, doing “meaningful work,” and being part of a team in a company that is oriented toward making a contribution to the improvement of the environment, culture, society and the planet. While these are laudable components and increasingly occupy a higher place in the job satisfaction hierarchy, people still want to be paid what they feel they are worth. Yep, there is still a whole lot to be said about, “show me the money.” No matter where one falls on the age/career continuum, bills must be paid, which include mortgages, rents, food, clothing and a bit of entertainment; you know, all those elements that comprise a good chunk of the Maslow analysis of basic wants and needs. Without getting too political about recent changes to the U.S. tax code, what that may or not mean for the average working person over time, and accepting that a “one-time bonus” is a pleasant outcome for those fortunate enough to work for companies that have offered such, it is just that a one-off event is hardly enough to sustain employee motivation and loyalty. To address a more long-term need, an old school idea has begun to re- emerge, that being prof i t sharing, characterized as “a bonus that lasts.” In an article in the Dallas Morning News on February 25, 2018, business writer Mitchell Schnurman, who coined said phrase, recently noted that although the one-time bonuses being passed out were nice, “they cannot hold a candle to some of the profit sharing awards being passed out.” Some interesting examples that he p ro v i d e s i n c l u d e Te x a s Instruments employees receiving an additional 20 percent of base salary for 2017 after having received the same boost the year before. He adds that, “Southwest Ai r l ines’ 2017 prof i t sharing was equal to just over 11 percent of workers’ pay following 13 percent the year before, and over 15 percent the year before t h a t . ” I n a d d i t i o n , Schnurman notes that a similar scenario played out at a General Motor s division in Arlington, Texas, where, in 2017, auto workers received a profit sharing bonus of $11,500 per person. GM awards have topped five figures for the last three years, including $12,000 in 2016. These are just some recent examples of AUTHOR S. Scot Litke, Hon. D.GE Joseph Blasi, Richard B. Freeman and Douglas Kruze, George Washington was one of the first American promoters of the idea of profit sharing. three Yale professors, specialize in analyzing the history and effects of profit sharing. They point out in their book, “The Citizen’s Share: Putting Ownership Back into Democracy,” a little more than one in three workers nationwide participate in some kind of prof i t sharing program. They point out that, nationally, the median payout from profit sharing was only $ 2 , 0 0 0 . Ho w e v e r , individual companies, as those cited earlier, far how forward-thinking companies are taking aggressive steps to reward and, hopefully, retain the folks who make their companies successful. This phenomenon is beginning to become more prevalent throughout the country. Schnurman suggests that “the idea behind profit sharing is that workers who have a stake in the outcome will act more like owners. They’ll be more productive and more willing to work together and go the extra mile.” Human resources experts, such as Southwest’s Elaine Parham, recently wrote that, “When people see a way to save money they’re always saying, ‘Hey, that’s my profit sharing.’” Her point is that this personalized attitude is a way to make a company more profitable. I would add that it is also a way of attracting and retaining good people. exceeded that measure. Blasi, Sherman and Kruze have developed a tax-incentive driven plan to encourage companies to par t icipate ful ly in the pract ice. Interestingly, Hillary Clinton incorporated that notion into her presidential campaign. However, she was far from the first politician to do so. George Washington was one of the first American promoters of the idea of profit sharing. In 1792, he put forth a plan that provided tax incentives for commercial cod fisherman to share their profits with all who worked for them from cabin boys to net haulers. Returning to the present, the authors point out that the 377 companies that have publically participated in the one-time bonus plan represent a miniscule percentage of the economy in terms of revenue and overall employment. The authors suggest that a true path to improving opportunities for workers to move up the economic ladder resides in a more long-term commitment to the profit sharing model they put forth, which is DEEP FOUNDATIONS • MAY/JUNE 2018 • 121
