Business Ethics - Profit Distribution Problem

surferdude

Imagine this scenario. You are the owner of a company that has been losing money for the past few years. You've drawn on both a personal and a company line of credit to keep the company solvent and meet payroll. Your staff are all paid at or above market average.

You've spent considerable time coming up with a new business plan. You've come up with a plan you are sure will work that will involve investing in technology and additional staff. You invest a considerable amount of your money, have had a few private investors commit some money and have given allyour employees a chance to invest but no employees do invest.

Three years later your plan has been a fantastic success. Not a single employee has been asked to do more than they previously were as the plan included hiring new staff.

Do you feel obligated in sharing the new huge profits with your staff? Do you feel the government should obligate you to share the profits with the staff?

JaneNY

I'm sure there's a 'gotcha' in here somewhere! But - okay, while I might not feel *obligated* to share the profit, necessarily, I probably would, in some way, thorugh bonuses perhaps. It is important that employees feel valued, and you want to lay that on so thick, that they stay loyal to you. Employee loyalty is GOLD. (Think about what Google does) If you're making a lot of money, have repaid whatever you personally invested, and can afford to, why not share the profit?

miller8966

surferdude wrote:

Imagine this scenario. You are the owner of a company that has been losing money for the past few years. You've drawn on both a personal and a company line of credit to keep the company solvent and meet payroll. Your staff are all paid at or above market average.

You've spent considerable time coming up with a new business plan. You've come up with a plan you are sure will work that will involve investing in technology and additional staff. You invest a considerable amount of your money, have had a few private investors commit some money and have given allyour employees a chance to invest but no employees do invest.

Three years later your plan has been a fantastic success. Not a single employee has been asked to do more than they previously were as the plan included hiring new staff.

Do you feel obligated in sharing the new huge profits with your staff? Do you feel the government should obligate you to share the profits with the staff?

Absolutely not. It was my investment and after giving the employees the ability to invest, if they opted not too than its not my problem.

Also if not a single employee is asked to do more than before than definetly no, they should not reap any of the rewards.

miller8966

JaneNY wrote:

I'm sure there's a 'gotcha' in here somewhere! But - okay, while I might not feel *obligated* to share the profit, necessarily, I probably would, in some way, thorugh bonuses perhaps. It is important that employees feel valued, and you want to lay that on so thick, that they stay loyal to you. Employee loyalty is GOLD. (Think about what Google does) If you're making a lot of money, have repaid whatever you personally invested, and can afford to, why not share the profit?

bonuses= doing more work. IF they do more than expected than of course they should receive a bonus.

mammasan

I would give them something. Even though they did not invest in the company it was their work, as well as the business plan, that enabled the company to prosper.

surferdude

JaneNY wrote:

I'm sure there's a 'gotcha' in here somewhere! But - okay, while I might not feel *obligated* to share the profit, necessarily, I probably would, in some way, thorugh bonuses perhaps. It is important that employees feel valued, and you want to lay that on so thick, that they stay loyal to you. Employee loyalty is GOLD. (Think about what Google does) If you're making a lot of money, have repaid whatever you personally invested, and can afford to, why not share the profit?

There is no "gotcha", just trying to build an example to try to understand how some people think and feel about capitalism.

Your bonus idea is a nice idea. Where I work bonuses are not so much tied to company performance as personal performance. They want to reward a person for excelling at their job during lean years as well as bumper years.

blackredyellow

I would give them some sort of bonus... I worked for a company that was doing badly, and it kills moral, and I can understand why employees wouldn't want to take the risk of investing if they thought the company might just shut down at some point.

Like Jane said, loyalty is gold... while they didn't invest financially in the company, they invested their hard work, loyalty and effort in a company that was heading in the wrong direction.

A bonus or a raise would be a nice "thank you" for sticking it out, and maybe some more motivation.

even flow?

A nice X-mas bonus, a couple of parties for worker and guest, a pay raise, would all be a nod to the work they do and sticking with you. After all if you were almost going to lose the whole thing and they still didn't jump ship, it shows they had respect for you and how you treated them.

surferdude

even flow? wrote:

A nice X-mas bonus, a couple of parties for worker and guest, a pay raise, would all be a nod to the work they do and sticking with you. After all if you were almost going to lose the whole thing and they still didn't jump ship, it shows they had respect for you and how you treated them.

What are you giving the raise for? None are doing more than previously and all are being paid at or above market average.

Just trying to understand why an employer should pay a premium to an employee for sticking with them during lean times when during the whole lean period the employee was still being paid at or above market average? What sacrifice or risk was the employee making to merit this bonus? The employees could have had no idea of the financial situation if the company was privately held. They certainly wouldn't know that the employee was drawing on his/her own personal line of credit to keep the company going.

It almost makes more sense for the employees to give the employer a bonus for the risks and sacrifices made by the employer by not cutting jobs, paying at or above market and ensuring payroll was always met during the lean years.

even flow?

surferdude wrote:

What are you giving the raise for? None are doing more than previously and all are being paid at or above market average.

Just trying to understand why an employer should pay a premium to an employee for sticking with them during lean times when during the whole lean period the employee was still being paid at or above market average? What sacrifice or risk was the employee making to merit this bonus? The employees could have had no idea of the financial situation if the company was privately held. They certainly wouldn't know that the employee was drawing on his/her own personal line of credit to keep the company going.

It almost makes more sense for the employees to give the employer a bonus for the risks and sacrifices made by the employer by not cutting jobs, paying at or above market and ensuring payroll was always met during the lean years.

So they all leave before buddy gets the act together and they can snub their noses as they toss quarters to him on the street. Everything is relevent.

blackredyellow

surferdude wrote:

What are you giving the raise for? None are doing more than previously and all are being paid at or above market average.

Just trying to understand why an employer should pay a premium to an employee for sticking with them during lean times when during the whole lean period the employee was still being paid at or above market average? What sacrifice or risk was the employee making to merit this bonus? The employees could have had no idea of the financial situation if the company was privately held. They certainly wouldn't know that the employee was drawing on his/her own personal line of credit to keep the company going.

It almost makes more sense for the employees to give the employer a bonus for the risks and sacrifices made by the employer by not cutting jobs, paying at or above market and ensuring payroll was always met during the lean years.

You didn't say that the employees had no idea of the financial situation, which I find is almost impossible. I've never worked for a company where rumors and gossip didn't go around, so unless no one else saw the books, they would know that something wasn't going well (especially if you asked them to invest).

Like I said before, I've been with a struggling company, and moral isn't good. Not knowing if your job will exist next week is a pretty stressful situation.
Employees aren't robots, if they are working for years (even at a good wage), and all of a sudden the company strikes it rich, and they don't see any of it, then they will quickly resent the management/owners.

I'm not sure what the point of this thread is... you ask people what they would do in that situation, then you try to change their minds.

miller8966

blackredyellow wrote:

You didn't say that the employees had no idea of the financial situation, which I find is almost impossible. I've never worked for a company where rumors and gossip didn't go around, so unless no one else saw the books, they would know that something wasn't going well (especially if you asked them to invest).

Like I said before, I've been with a struggling company, and moral isn't good. Not knowing if your job will exist next week is a pretty stressful situation.
Employees aren't robots, if they are working for years (even at a good wage), and all of a sudden the company strikes it rich, and they don't see any of it, then they will quickly resent the management/owners.

I'm not sure what the point of this thread is... you ask people what they would do in that situation, then you try to change their minds.

Im working on a sinking ship right now ( mortgage industry). But i wouldnt expect a raise or a bonus if i dont put more time in and effort.

farfromglorified

surferdude wrote:

Do you feel obligated in sharing the new huge profits with your staff?

No. Why should I?

Do you feel the government should obligate you to share the profits with the staff?

No. Why should they?

even flow?

miller8966 wrote:

Im working on a sinking ship right now ( mortgage industry). But i wouldnt expect a raise or a bonus if i dont put more time in and effort.

Yet, you will surely agree the cost of living raise for no good reason though, well your pay is stagnent? Makes super sense.

gue_barium

surferdude wrote:

Imagine this scenario. You are the owner of a company that has been losing money for the past few years. You've drawn on both a personal and a company line of credit to keep the company solvent and meet payroll. Your staff are all paid at or above market average.

You've spent considerable time coming up with a new business plan. You've come up with a plan you are sure will work that will involve investing in technology and additional staff. You invest a considerable amount of your money, have had a few private investors commit some money and have given allyour employees a chance to invest but no employees do invest.

Three years later your plan has been a fantastic success. Not a single employee has been asked to do more than they previously were as the plan included hiring new staff.

Do you feel obligated in sharing the new huge profits with your staff? Do you feel the government should obligate you to share the profits with the staff?

I feel obligated in growing a vegetable garden and drinking clean water from a well.

cincybearcat

I'm betting that despite a great business plan, it couldn't have been accomplished without the hard work of the employees. Therefore, you should share the wealth...and by doing so you do create a happier workforce which in turn is more creative, productive, and safe.

farfromglorified

cincybearcat wrote:

I'm betting that despite a great business plan, it couldn't have been accomplished without the hard work of the employees. Therefore, you should share the wealth...and by doing so you do create a happier workforce which in turn is more creative, productive, and safe.

Certainly! But, at least in my interpretation, the operative word was obligation. An obligation implies only one appropriate path. A singular path, arrived at by choice, implies a singular purpose. The purposes of Mr Business Owner in the example may have nothing to do with a "happier workforce which in turn is more creative, productive, and safe".

surferdude

cincybearcat wrote:

I'm betting that despite a great business plan, it couldn't have been accomplished without the hard work of the employees. Therefore, you should share the wealth...and by doing so you do create a happier workforce which in turn is more creative, productive, and safe.

I'm all for bonuses based on personal performance that may be topped up by the company based on fiscal performance. But I am surprised at all the people who only feel that the obligation to share is on the owners, with no responisbility or even thanks to the owner. The employees didn't offer to work for lessduring lean years. They didn't offer the owner bonuses during the lean years for taking on the financial burden of ensuring the company stayed solvent and payroll was always met. Based on the responses I've seen so far it looks like the employees are far more greedy than the employer. Many want the employees to be rewarded far beyong market average for doing their job.

blackredyellow

surferdude wrote:

I'm all for bonuses based on personal performance that may be topped up by the company based on fiscal performance. But I am surprised at all the people who only feel that the obligation to share is on the owners, with no responisbility or even thanks to the owner. The employees didn't offer to work for lessduring lean years. They didn't offer the owner bonuses during the lean years for taking on the financial burden of ensuring the company stayed solvent and payroll was always met. Based on the responses I've seen so far it looks like the employees are far more greedy than the employer. Many want the employees to be rewarded far beyong market average for doing their job.

In the end it comes down to how important keeping good, happy employees are to you as an owner or a manager. A lot of people think that it's important, but you don't seem to. It's all in your business/management philosophy I guess... There is no right answer, just different views/approaches on what makes a company run better.

polaris

dude ... u created a loaded scenario with loaded responses ... what real life situation are we talking about here??

wouldn't that be a better case study then one where you skew everything towards the responses you want?

surferdude

polaris wrote:

dude ... u created a loaded scenario with loaded responses ... what real life situation are we talking about here??

wouldn't that be a better case study then one where you skew everything towards the responses you want?

Real life situations may be Exxon, any bank in Canada, Microsoft. I know for a fact that banks in Canada and Microsoft treat their employees very well. My scenario is pretty much mirrors the Apple story.