Employee Shares

[Gladstone]

Reading over another thread I noted someone putting forward the idea that employees should get a direct share of the profits of the company they work in (ie their wages would go up if the sales went up).

For the more economically minded of you how practical is this?

[watch-this-drive]

I think it has to be case specific, labour is a cost of business - putting an automatic multiplier on this cost is not wise.
That said you need to find a balance of reward.

My opinion is that employees only deserve an abnormal reward if they have put in an abnormal performance or are taking an abnormal risk by working for the company.
Many people may disagree with me but I believe that in general that is the best practice for business and therefore everyone associated with the business.
When employees take the extra risk of investing in the business then as shareholders they should of course be rewarded, that is a big decision to make though as you may become overly dependant of the success of that company - livlihood and salary in one risk.

[Gladstone]

I think the idea here was that say...50% of the profits would be distributed to the employees or something like that, the more the company made so did the employees, supposed to act as an incentive to work harder.

[Shepherd]

I think the idea here was that say...50% of the profits would be distributed to the employees or something like that, the more the company made so did the employees, supposed to act as an incentive to work harder.

Would the employees contribute if the company lost money?

[watch-this-drive]

I think the idea here was that say...50% of the profits would be distributed to the employees or something like that, the more the company made so did the employees, supposed to act as an incentive to work harder.

In that case I would almost always be against the idea -
employees working harder doesnt always account for increase profits,
employees dont take 50% of the risk - if they havent invested their savings in the company and the owners have then why the disproportionate reward?
Generally -
Salary is the reward for labour - profit is the reward for risk
the two shouldnt be confused.

[Gladstone]

I think the idea here was that say...50% of the profits would be distributed to the employees or something like that, the more the company made so did the employees, supposed to act as an incentive to work harder.

Would the employees contribute if the company lost money?

This wasn't a clear outlined plan, just a floated idea, but as far as I could tell it was a one way thing, they get if the company earns and get their normal salery if it does not.

I agree they should have to take some risk but if you consider the fact that some companies that make billions pay people the minimum wage it's hardly proportional.

[watch-this-drive]

I agree they should have to take some risk but if you consider the fact that some companies that make billions pay people the minimum wage it's hardly proportional.

Proportional to what?
Would that person be able to do much better than the minimum wage elsewhere?
If the answer is no then they arent really responsible for any of the billions of profit - why should they be rewarded for mere association?

[Gladstone]

This all comes down to two things:

Do all employees get wages proportional to their contribution to the company?

How do you measure that contribution?

[watch-this-drive]

This all comes down to two things:

Do all employees get wages proportional to their contribution to the company?

How do you measure that contribution?

Exactly and specifically the global profits of the company should not really be a factor!

[Gladstone]

No I don't think it was in terms of global profits, say for example your partiular store earns 1million pure profit, should the employees not get some of that?