FINANCE AND INVESTMENT
By NICHOLAS DAVENPORT
THE great industrial problem of "manage- ment and men," which has never yet been solved in a satisfactorily democratic way, crops up again with the new ICI profit- sharing scheme and Sir Ernest Lever's apologia for managers. Both are well worth studying, but neither made me feel entirely happy. There will always be somebody to suggest that the capitalist system is really a loving partnership between capital, manage- ment and workers, but having worked in the system all my life I know this to be untrue. What we reformists in all parties have been trying to do in the last thirty years is to stop its being a hateful, immoral and inefficient system, and I think we may claim that by and large we have succeeded. The capitalist system is working today efficiently, in spite of being over-taxed, and without serious social injustice. But it is not a Partnership. The providers of the risk capital are legally the owners and the net Profits, after providing for the managers and men at the market rate for salaries and wages, belong to the equity. The question is Whether the owners should add to the market rate of pay by giving their managers and men special bonuses. Apparently about 25 per cent, of all industrial firms in this country think that they should—and, in fact, operate some profit-sharing or bonus scheme. Of the profit-sharing ones the most import- ant are those of Associated Portland Cement, Rowntree, Vauxhall Motors, Triplex Glass, Joseph Lucas, Tate and Lyle, and Baker Perkins.
ICI Profit-sharing Scheme
In the case of ICI, it is proposed, after the 100 per cent. share bonus has been distri- buted, to 'pay each adult employee-with 24 or more years' service 1 per cent. of his annual pay for every 1 per cent. of the ordinary dividend in excess of 5 per cent. Assuming that 74 per cent. will be the divi- dend for 1954, that will mean a bonus of 24 Per cent. This will be paid, after deduction of income tax, to trustees for investment in the ordinary stock of the company at the current market price. The stock will be held by the trustees until an employee has a minimum of £25 worth and it will then be turned over to him without restriction. About 75,000 permanent employees will be affected and the initial annual cost of the scheme will be about £1 million gross. It Is not intended to be an incentive for harder work, The ICI are alrea,dy providing incentive schemes for 43 per cent. of their Workers, in addition to pension and welfare services costing £44 millions a year. This is Purely a good-will scheme designed to create
have taken the form perhaps of one free bonus share for every share subscribed up to a certain limit. Personally, that would make me feel much more capitalistic than a £25 gift certificate from some benevolent trustees at some future date.
Rewards for Managers I do not know what Sir Ernest Lever thinks of the ICI scheme but judging from his recent remarks to the Swansea Business Club he would probably claim that the industrial future of Great Britain depended much more on providing greater rewards for the skilled and adventurous executives (like himself), Who innovate, improve and organise, than on providing profit-sharing for workers. It is probably true that we
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