DIVIDENDS ON THEIR LABOUR By CHARLES GRAHAM HOPE At the end of 1948 an American co-partnership campony, the Lincoln Electric Company, of Cleveland, Ohio, paid to 1,087 people earned dividends on the year's working of $3,800,000 This works out at an average of $3,455 per man, or something over £1,200, or over 100 per cent of the actual wages.
Yet there are people who say that the system of co-partnership. which is recommended by Pius XI in Quadragesinto Anno, Section 55, and by the present Pope, Pius XII, in many broadcasts recently, More than thirty years ago a young man, James F. Lincoln, became president of a struggling company making electric arc-welding apparatus. He believed that management and men are fellow workers. He said: " I do not believe you can take any man in a manufacturing organisation and say he is a worker or he is a manager, because all are workers and all are managers."
He was not a Catholic; he was a hard-headed businessman and by his system of co-ownership " profits" from 60 to 176 per cent of " wages " are regularly paid.
ADVISORY BOARD The basis of his scheme is the Advisory Board; and its essential work is " the developing of the normally unused abilities inherent in the organisation. In order to bring the intelligence of all people in the organisation to bear on the subject this board was chosen from the entire personnel of She plant."
The members of the board consist of one man from each department or shop elected by his fellow members there, The foremen in the plant also elect their representatives. Theplant superintendent is also a member and the president of the company is chairman. Members are elected annually.
The elected members of the board receive an honorarium of 100 dollars a year for their work on the board or in connection with it outside the meetings.
ALL MATTERS DISCUSSED " All matters." says Mr. Lincoln, " that affect the organisation arc discussed and settled there. Although the president has veto power if action is taken contrary to the policy, yet in 30 years of advisory hoard operation it has never been used."
The board meets every other Monday at 4 p.m. and sits for about an hour, In working time be it noted.
seotEverything is discussed freely and frankly: wage rates, hours, ideas about working methods, improving of technique, sales and marketing. lfairse., work-rating, distribution of pvr The board is advisory and does not directly or immediately control policy, but most of its ideas eventually become the policy of the company. And membership of the board
of direcors is open to all members of the company.
WHAT IT HAS DONE Here are some of the things that the board has done: In 1917 members of the company were enabled to buy the company's stock, by means of deductions from wages. Stock bought this way has to be resold to the company if the owner leaves, but this restriction does not apply to stock bought privately. More than half the members now own stock.
In 1920 the board instituted holidays with full pay. (Note the dates when these things were done.) The whole factory shuts down for a fortnight in August every year.
EARNED BONUS In l934 a bonus system was recommended and introduced. This had previously been attempted in 1918, but had not worked successfully owing to lack of understanding and experience all round. Now the idea was put forward by the board and accepted. The amount of the bonus is determined by the success of the company, coming direct from the efforts of all those concerned; and it is clearly understood by all that the continuance of the bonus depends solely on the earnings of the company. It is in fact a dividend on labour, not a gift from management. " The bonus," says Lincoln, " is not a Christmas present. It is not a gesture made by the company intended to buy the workers' goodwill. Every cent of it is earned."
RATING FOR BONUS The method of distribution is simply that after deducting a 6 per cent dividend to the stockholders— some of whom are already members of the company—and allotment for reserve and working capital, the balance of the year's profits is divided among all the people in the organisation on the basis of their contribution to the success of the company during that year. But this plan does not only work materially, it has achieved a real partnership in the business of production, a partnership and co-operation not only for the purpose of production and personal gain but for service, for the people who work and for the consumer. If this non-Catholic employer can do this to his employees. how much more should Catholic employers 'be able to do it?