68. Examples of successful profit sharing 1 tigation of profit sharing by the National Industrial In a number of cases profit sharing has worked out to the advan- The investage and satisfaction of both employer and employees. This has been shown, for example, by the investigations of the National Industrial Conference Board. The Board tested the practicability of profit sharing in the United States by sending out inquiries to industrial Conference establishments which at one time or another had used this method of remuneration. The following extract from the 1920 report of the Board contains some of the favorable replies to these inquiries: Board. loyalty and coöpera tion. A company manufacturing plumbing goods, whose plan has had Benefits: a long period of trial, stated: "In general, we feel that a system of profit sharing is an ameliorating influence, but that it is not a cure-all." The Miner-Hillard Milling Company, grain millers, Wilkes-Barre, Increased Pa., whose plan was adopted in 1906, reported: "It has paid us well, because our relations with our men have made our work lighter and a pleasure in many cases where it would otherwise have been a burden. It has always attracted to us the best quality of men.” A chemical manufacturing company, whose plan was adopted in 1888, wrote: "We feel that the effect upon our operatives has been good." of labor turnover. A fuel company of Massachusetts which adopted profit sharing Reduction in 1918 gave an account of the operation of the plan in a coke plant. It wrote that the plan had a tendency to reduce labor turnover; to make employees more economical with materials, and to bring about "contentment and coöperation of workers." It said further: "After once receiving a share of profits the employees are anxious to hold their jobs so as to receive all subsequent profits." A shoe manufacturing company, whose plan was adopted in 1917, wrote: "The effect of the plan has been to reduce labor turnover, also labor disturbances. We feel that it has added to the coöperation of our workers, and this would of necessity improve the quality of the work." The Cleveland Twist Drill Company, whose plan was adopted in 1915, stated: "We do not know of any direct benefit from the 1 From the National Industrial Conference Board, Research Report No. 29, Practical Experience with Profit Sharing in Industrial Establishments. Boston, 1920; pp. 11-19. Increased efficiency. Avoidance of labor disturb ances. Promotion of thrift. profit-sharing plan in economy in the use of material, although there may be an indirect benefit.” The Brooklyn Edison Company, Brooklyn, N.Y., wrote: "Profit sharing has led to increased efficiency and regard for company property." Only a few establishments reported as to the effect of profit-sharing plans on the quality and quantity of work turned out. . . . A textile establishment . . . said regarding the quality of product: "This has undoubtedly been improved through the increased coöperation of employees and between heads of departments." Another establishment reported: "We have several instances where a press gang would work extra each day in order that they might increase their annual share of the profits as well as add to their daily earnings." The R. F. Simmons Company, of Attleboro, Mass., jewelry manufacturers, which adopted profit sharing in 1902 with a view to promoting cordial relations with their workers, wrote: "While our plan . . . is not a panacea for all industrial ills, yet we have felt that our policy in this respect has been a material factor in securing loyal and interested coöperation in the production of Simmons Chains. Furthermore, this loyalty was put to a severe test in August, 1918, when a general strike (the first of its kind in this city) occurred in the jewelry business here, and only one man and three women out of 200 employees responded to the strike call . . . despite the fact that by far the majority of the jewelry employees of the city went on strike, and in the face of vigorous and persistent picketing of our plant." ... The Brooklyn Edison Company wrote: "We feel that our plan is unique and very satisfactory to the employees and to the company. It has tended to lengthen the term of service of the employees; induced many to become owners of stock in the company, and makes for general loyalty and efficiency. On the other hand, it has led many employees to establish systematic habits of thrift. An establishment which distributes profits in the form of shares of stock, wrote: "Only in a few cases of necessity have the employees sold their shares or even their balances, which goes to show that the employees are anxious to save.” . . 69. Examples of unsuccessful profit sharing1 ber of cases profit sharing has Although profit sharing has proved more or less successful in a In a numnumber of cases, in other instances it has been abandoned as an unworkable scheme. In the following extract Dr. Paul Monroe presents a number of cases in which industrial establishments in the United States have abandoned profit sharing: been aban- its failure labor Keene Brothers, of Lynn, Mass., manufacturers of shoes, adopted a plan of profit sharing in 1885, but did not make public any details. One or two divisions [of profits] were made; but the personnel of troubles, the firm was changed and the plan was abandoned. It had not prevented labor disturbances during the years that dividends were paid. The New England Granite Works, of Westerly, R. I., adopted an elaborate plan of profit sharing in 1886, chiefly as a protection against labor difficulties. Lack of good faith was charged by both sides; no bonus was ever paid. ment of the Welshans and McEwans, plumbers, of Omaha, Neb., divided all net profits for 1886, after reserving interest on capital, pro rata between capital and wages. For the first year the bonus amounted to an extra month's pay on eight months' work. The following year the men went out on a general strike, and the plan was abandoned. The Hoffman and Billings Company, of Milwaukee, Wis., manu- because of facturers of plumbers' goods, divided net profits equally between capital and labor, each laborer participating in proportion to wages earned for the years 1886-1890. "This plan worked well for several years when there were profits to divide, but when we happened to have a poor year, and losses instead of gains at the end of the year, we met sour faces all around among our men, and concluded that it was too much of a 'jug-handle affair' to be continued, so we dropped it. . . . the resentemployees when there were no profits to divide, because of its failure production to increase The Springfield Foundry Company, of Springfield, Mass., began to divide profits in 1887, and discontinued the plan after three years' trial. The bonus amounted to 2 or 3 per cent on wages. The firm says, "In our business, it was an injury rather than a benefit to us. We could not see any perceptible increase in the production of our benefits, 1 From Paul Monroe, "Profit Sharing in the United States." The American Journal of Sociology, Vol. 1, No. 6. May, 1896; pp. 700-701, 705-707, 709. and secure other because or because of the fail ure of profit the employ ees more careful and helpful. Summary. men, nor interest in the care of their tools or material. On the contrary, our employees began to think that they were the proper parties to fix wages, and the prices at which we should sell the products. The employees were also careful to take advantage of their membership in the labor unions to enforce their demands. Since we have abandoned the system of profit sharing, these troubles do not exist." The St. Louis (Mo.) Shovel Company divided profits from 1887 to 1894. Their opinion is that the plan decreases the profits of the firm, and "so long as labor unions dominate labor, profit sharing cannot be a success nor prevent labor troubles, even though employers conscientiously and liberally endeavor to work under the system. . . The Watertown (N. Y.) Steam Engine Company divided profits for the year 1891. Their experience was "that in the case of a fair proportion of our men. we secured better service, better regard for the interests of the business, but that a still larger number of the men regarded their dividends as simply so much extra pay and were no more careful than before. We are quite willing to believe that if the experiment had been continued for a number of years we should have developed among the men a sentiment which would have compelled the indolent and indifferent ones to give us better service or incur the disapproval and ostracism of their fellow workmen. The result for the first year, however, was so far from showing any very favorable improvement that we discontinued it." A brief summary must here suffice. . . . In comparison with European experience, one is struck with the brevity of the trial [of profit sharing in the United States]. As to a fundamental principle, the large majority [of firms] are of the opinion that such a plan results in a financial loss to the employer, he being recouped if at all in non-computable ways. Those which continue the plan do so, not as a matter of philanthropy, but as a matter of justice if not of business. These are about equally divided in their opinion as to the direct financial benefit of the plan to the firm. While it is true . . . that one success will prove that it can be done with profit and any number of failures not prove the contrary, yet it is as a general type, not an individual variation, that such a system has social significance. in the States. Often discussed in connection with profit sharing, but of greater Status of social significance, is coöperation. In general, coöperation has cooperation developed more slowly in the United States than in Great Britain United and on the continent of Europe. Nevertheless, some types of coöperation have attained considerable success in this country, particularly, perhaps, consumers' coöperation. In the following passage, James Peter Warbasse gives some examples of successful consumers' coöperation in the United States: ... consumers' coöperative societies in the United States. All over the country the movement has developed. It has been Over 2000 sporadic. No center can be designated as the seat of the renaissance of coöperation. The agricultural people of the northern states have been among the first in this new era. The Coöperative League of America has knowledge of over 2,000 true consumers' coöperative societies conducting stores. The Tri-state Coöperative Society is a federation of about seventy societies, mostly in western Pennsylvania. These societies are constituted of many nationalities; Poles, Slovaks, Lithuanians, Ukranians, Italians and Bohemians. One of the typical successful organizations is that of Bentleyville, Penn. Here, in a little mining town, it has crowded out private business, and handles groceries, meats, dry goods, shoes, feed, and automobile supplies to the amount of $200,000 a year. ... The Tri- States Cooperative Society. The Central States Coöperative Society is a federation of about The Central sixty-five distributive societies. Its headquarters are Springfield, Ill. It maintains a wholesale with a warehouse at East St. Louis. These societies are largely built up among the union locals of the United Mine Workers in Illinois. This is a group of about eighty of these societies. Their financial success enables many of them to return to their members a savings-return of from 6 to 12 per cent quarterly on the cost of their purchases. . . . ... The Pala tine Co Illinois is but an index of what is going on in the neighboring states. Strong groups of societies exist in Indiana, Ohio and Iowa. The Palatine Coöperative Society of Chicago with 1200 members Society. 1 From James Peter Warbasse, The Coöperative Consumers' Movement in the United States. The Coöperative League of America, New York, 1919. operative |