Business Ethics - Profit Distribution Problem

JaneNY

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.

^^^ That's food for thought too. I own a small business. While I don't technically have employees, I have contract workers, who cover some of my work as subcontractors. I treat them as well as possible, and I do give bonuses. I work my own ass off, and they do just enough to help me keep the business running. Without them, I couldn't afford to be the size I am (I'm not huge, but I can pay my basic life expenses and can cover my pearl jam and other band/music habit). If my subcontractors feel dissatisfied, they can take on other work instead of the work I have for them. So I treat them well. I guess as a business owner, I feel that I *should* be more invested and put in more effort than I expect of others, because while I think I'm generous, it is not a collective - I pay them set fees (and I limit the amount of work I give them, to only what I can't cover), and I keep the rest. It serves me to pay them bonuses. While I am generous, I do it to help my business.

polaris

surferdude wrote:

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.

i've never heard of a bank losing money where the ceo puts in his or her own money ... u gotta be kidding me?? ... exxon?? ... since when are these industries on lean times where only one person makes a sacrifice?

farfromglorified

surferdude wrote:

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.

Umm...I think you're simplifying some very complex companies and actions. None of the above really mirrors the story you laid out in the beginning of this thread.

I agree with your ethical conclusions here. However, I'm now wondering how you arrived at them.

even flow?

surferdude wrote:

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.

Working for one of the majors here in Cda. I will attest that not all employees get treated very well.

surferdude

even flow? wrote:

Working for one of the majors here in Cda. I will attest that not all employees get treated very well.

They must treat you all right or you wouldn't work for them. It's not like there's a lack of jobs to be found in the GTA.

even flow?

surferdude wrote:

They must treat you all right or you wouldn't work for them. It's not like there's a lack of jobs to be found in the GTA.

Right and very well have a large margin between them. And with the amount of employees they do employ I would imagine that not all are treated very well.

I do enjoy my job and the perks.

miller8966

even flow? wrote:

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

What are you even talking about?

even flow?

miller8966 wrote:

What are you even talking about?

If nobody gets raises. Why would or should the cost of living have to go up. Get it now? You say nobody warrants a raise. Well then the rest is elementary.

CorporateWhore

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?

The answer seems quite obvious to me, surferdude, and I think that is what you are getting at:

I would not feel obligated to share the new profits. The simple fact is this: risk and reward are proportional. If I take all of the risk in investing my own hard-earned capital, I should receive all of the reward.

Conversely, if the project had been a flaming failure and I lost all of my money, I would not expect the employees to share the debt burden.

This seems to be a simple shareholder equity issue: if the employees decide to buy stock in your company, they deserve the rights of a stockholder. If they don't buy, they don't get rights as a stockholder.

I would find any other arrangement to be a perverse understanding of economics.

hippiemom

I would feel personally obligated to give raises. Not a set formula, the size of the raise would depend to a great extent on job performance, but the fact is that regardless of how brilliant my business plan might be, it's worthless without a staff to carry it out. I would give myself a larger raise than those who contributed less.

soulsinging

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.

becos they could've used the financial crisis as an excuse to jump ship and force you to divert resources to train new employees in a time of transition when having experienced employees would be very helpful. employees also have far less disposable income than even the most poorly paid ceo, so asking them to "invest" in the company is essentially no different from giving them a paycut.

soulsinging

CorporateWhore wrote:

Conversely, if the project had been a flaming failure and I lost all of my money, I would not expect the employees to share the debt burden.

but they would, becos they would lose their jobs due to your failures. employee fortunes rise and fall with the company. if the company does well, its employees should be rewarded. if it does poorly, the employees will suffer.

farfromglorified

hippiemom wrote:

I would feel personally obligated to give raises. Not a set formula, the size of the raise would depend to a great extent on job performance, but the fact is that regardless of how brilliant my business plan might be, it's worthless without a staff to carry it out. I would give myself a larger raise than those who contributed less.

Hippiemom, if you don't mind me asking, do you own a house?

farfromglorified

soulsinging wrote:

but they would, becos they would lose their jobs due to your failures. employee fortunes rise and fall with the company. if the company does well, its employees should be rewarded. if it does poorly, the employees will suffer.

Tell that to the UAW.

surferdude

soulsinging wrote:

but they would, becos they would lose their jobs due to your failures. employee fortunes rise and fall with the company. if the company does well, its employees should be rewarded. if it does poorly, the employees will suffer.

But the company was losing money for years. The employees were not adversely affected in any tangible way. They were given the opportunity to have a vested interest in the company and hence something to lose and they chose not to. They've seemingly adopted just about the most selfish course of action possible. Not helping out the business without remuneration in the lean years. but expecting rewards without risk or additional effort on their part.

Soulsinging, can I get a part of all your future income? After all I've been here for you on the board through all your lean years. I'll continue to be here for you in the future so I think you should start paying me for it once your education starts to provide us income. I'm sure you'll feel a moral obligation to do so, so I feel a little foolish in asking.

soulsinging

farfromglorified wrote:

Tell that to the UAW.

i have as many issues with unions as i do with ceo's.

soulsinging

surferdude wrote:

But the company was losing money for years. The employees were not adversely affected in any tangible way. They were given the opportunity to have a vested interest in the company and hence something to lose and they chose not to. They've seemingly adopted just about the most selfish course of action possible. Not helping out the business without remuneration in the lean years. but expecting rewards without risk or additional effort on their part.

Soulsinging, can I get a part of all your future income? After all I've been here for you on the board through all your lean years. I'll continue to be here for you in the future so I think you should start paying me for it once your education starts to provide us income. I'm sure you'll feel a moral obligation to do so, so I feel a little foolish in asking.

no, becos you've never done a damn thing for me. my parents, however, will benefit from the support they gave me in their lean years through gifts i will bestow upon the once i am able.

it is up to management of companies to manage the company well. that is their job. it is the job of the workers to do their work. that is their job. but they all have a role in the company... so by the same logic you use, why should ceo's get a raise for simply doing their job but workers should not get a raise for going theirs? they have different tasks within the company and no company can function or succeed without the efforts of both. when both are doing their jobs and the company prospers, both should be rewarded. ceo's already are compensated more due to the greater difficulties of their role and i have no problem with them getting a bigger cut of the added income. but to not reward those who were there and helped the company get to the greater fortunes is bad business.

furthermore, your example is unrealistic becos i think it is impossible to have a massive revenue turnaround like you are proposing without ANY change at all in what the current workers were doing. they will have to make some adjustment.

farfromglorified

Why is what the employees are doing relevant to the question??????

farfromglorified

soulsinging wrote:

i have as many issues with unions as i do with ceo's.

Fair enough.

PaperPlates

The bigger point of the OP's original scenario, and the one he ended with, was whether the GOVT should obligate (force) you to share those profits.
Seems everyone's missing that.

And no, they shouldnt.

Thats socialism.

I call it the "Hillary Plan".

Its against what America stands for.