Business Ethics - Profit Distribution Problem

soulsinging

PaperPlates wrote:

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.

i understand exactly what his point was. i simply dont think it's as black and white as he makes it seem. im not very comfortable with the government regulating some sort of profit sharing ratio... it would be a nightmare trying to work out the details and only worsen the situation becos companies would do their damndest to find loopholes. but i dont think social pressure deterring greed and elitism/aristocracy while promoting more equitable and charitable wealth distribution is a bad thing as a social value.

surferdude

soulsinging wrote:

i understand exactly what his point was. i simply dont think it's as black and white as he makes it seem. im not very comfortable with the government regulating some sort of profit sharing ratio... it would be a nightmare trying to work out the details and only worsen the situation becos companies would do their damndest to find loopholes. but i dont think social pressure deterring greed and elitism/aristocracy while promoting more equitable and charitable wealth distribution is a bad thing as a social value.

Basically everyone who wants wealth distribution wants it done because it makes for good business practice. But many of these same people then also want increases to minimum wage because business is too stupid to follow good business practice. It seems they believe in a free market when it profits them and believe n government intervention when it profits them. Looks to me that the individual worker is driven much more by greed than any employer.

hippiemom

farfromglorified wrote:

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

yes

farfromglorified

hippiemom wrote:

yes

Ok. How long have you owned that house?

hippiemom

farfromglorified wrote:

Ok. How long have you owned that house?

About 16 years.

*full disclosure: I took a hefty dose of dilaudid about an hour ago, so if this gets complicated, I'm bailing until tomorrow

sonicreducer

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?

they should have invested, but that is why you are the owner and they aren't. i would invest 25% in some way that would affect employee moral and performance based stuff.

the gov't should have no right to tell you how to share your profits.

farfromglorified

hippiemom wrote:

About 16 years.

*full disclosure: I took a hefty dose of dilaudid about an hour ago, so if this gets complicated, I'm bailing until tomorrow

Hehe...this shouldn't get complicated (but if you need to go, I certainly won't be insulted).

Now, if you've owned that house for 16 years, it's probably worth a hell of a lot more than you paid for it. So if you sold it, you'd stand to profit quite a bit. Therefore, I have a very basic question for you, or anyone else who stands to profit from a sale of something they own:

What percentage of that profit will you give to the men who built your house, any previous owners of that house who maintained it, any bank that helped you purchase that house, and anyone else who helped make your profit from selling that house possible?

soulsinging

surferdude wrote:

Basically everyone who wants wealth distribution wants it done because it makes for good business practice. But many of these same people then also want increases to minimum wage because business is too stupid to follow good business practice. It seems they believe in a free market when it profits them and believe n government intervention when it profits them. Looks to me that the individual worker is driven much more by greed than any employer.

kinda like how so many christian free-marketeers whine about how government is depriving business of freedom and sticking its nose where it doesn't belong while at the same time doing their damndest to ban gays, contraception, evolution, and anything else they dont agree with?

hippiemom

farfromglorified wrote:

Hehe...this shouldn't get complicated (but if you need to go, I certainly won't be insulted).

Now, if you've owned that house for 16 years, it's probably worth a hell of a lot more than you paid for it. So if you sold it, you'd stand to profit quite a bit. Therefore, I have a very basic question for you, or anyone else who stands to profit from a sale of something they own:

What percentage of that profit will you give to the men who built your house, any previous owners of that house who maintained it, any bank that helped you purchase that house, and anyone else who helped make your profit from selling that house possible?

Well, in my case it's pretty easy. The house is 86 years old, so the men who built it are dead. We bought it from the daughter of the original owner, and she is also dead. She was an only child and had no children, so there are no heirs to think about. We paid the bank for their services during the eight years that we used them. Anyone who helps us sell it (realtors, title companies, etc.) will indeed take a percentage of the proceeds.

Rushlimbo

farfromglorified wrote:

Hehe...this shouldn't get complicated (but if you need to go, I certainly won't be insulted).

Now, if you've owned that house for 16 years, it's probably worth a hell of a lot more than you paid for it. So if you sold it, you'd stand to profit quite a bit. Therefore, I have a very basic question for you, or anyone else who stands to profit from a sale of something they own:

What percentage of that profit will you give to the men who built your house, any previous owners of that house who maintained it, any bank that helped you purchase that house, and anyone else who helped make your profit from selling that house possible?

A purchased house and an existing business cannot be compared as a relevant example. try again.

farfromglorified

hippiemom wrote:

Well, in my case it's pretty easy. The house is 86 years old, so the men who built it are dead. We bought it from the daughter of the original owner, and she is also dead. She was an only child and had no children, so there are no heirs to think about.

Ok. So if those people were still alive or they had heirs, how much would you give them?

We paid the bank for their services during the eight years that we used them.

Ahhh....but did the employer in this example not also pay the employees their full salaries?

Anyone who helps us sell it (realtors, title companies, etc.) will indeed take a percentage of the proceeds.

Certainly.

farfromglorified

Rushlimbo wrote:

A purchased house and an existing business cannot be compared as a relevant example. try again.

Hehe...why not?

surferdude

soulsinging wrote:

kinda like how so many christian free-marketeers whine about how government is depriving business of freedom and sticking its nose where it doesn't belong while at the same time doing their damndest to ban gays, contraception, evolution, and anything else they dont agree with?

probably. or like atheist who admit they don't give a fuck about anyone and still somehow feel good about themselves. or wallow in personal self hatred and try to become lawyers.

Rushlimbo

farfromglorified wrote:

Hehe...why not?

How

are

they

similar

??

hippiemom

farfromglorified wrote:

Ok. So if those people were still alive or they had heirs, how much would you give them?

Nothing. They stopped contributing to the value the day they signed the deed, at which point they were compensated for everything they had done up until that point. If I'd expected them to continue to show up and make improvements every week, I'd certainly pay them.

farfromglorified wrote:

Ahhh....but did the employer in this example not also pay the employees their full salaries?

I have to admit that you've lost me here.

farfromglorified

Rushlimbo wrote:

How

are

they

similar

??

Both involve people. Both involve basic economic exchange. Both involve potential profits. Both involve potential loss. Both involve specialization. Both involve the application of labor and resources. That's just a start. I can't think of a way they're different.

Regardless, please back up your statement that they cannot be compared.

CorporateWhore

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 employees didn't contribute ANY CAPITAL. They are being paid for services! NOT CAPITAL CONTRIBUTION. Their contribution is rewarded in the form of wages/salaries.

When they lose their jobs, they don't lose any capital contribution (stock). The stockholders DO lose this money because stock is not guaranteed to be repaid. The contract they sign indicates the payment terms.

The employees can get a job anywhere and receive similar wages/salaries, but the stockholders CANNOT get their money back if its lost. They take the risk, not the employees.

farfromglorified

hippiemom wrote:

Nothing. They stopped contributing to the value the day they signed the deed, at which point they were compensated for everything they had done up until that point. If I'd expected them to continue to show up and make improvements every week, I'd certainly pay them.

I have to admit that you've lost me here.

Ok. This is good stuff.

How do the employees in the original posters story not fit this same description? They too have already been compensated for everything they had done up until that point. Each one was paid for their labor at the price they agreed to when they took the job or got their last raise / pay cut.

What I'm trying to understand is on what grounds these employees can believe they're obligated to collect additional funds for services already purchased and paid for. If they have that right, why doesn't your dead architect?

Rushlimbo

farfromglorified wrote:

Both involve people. Both involve basic economic exchange. Both involve potential profits. Both involve potential loss. Both involve specialization. Both involve the application of labor and resources. That's just a start. I can't think of a way they're different.

Regardless, please back up your statement that they cannot be compared.

Many things involve your above examples. That doesnt make them relevant to the discussion.

A business has employees that are a continued factor in the increase in wealth. A house doesnt rely on continuing employment to become more valuable -- location, location, location.

Ebizzie

This grand business plan you describe revolved around putting more money into the business...greater funds for research, development, technology, etc. Personnel is an asset just like those other investments. Employees are a component of any successful business. Common sense dictates that those employees are an asset that should also be invested in as the business grows.

Say the owner dipped into his own pocket to invest in research. Well, research departments aren't just something that you go and pick up at Staples, that investment will most likely include people as well as equipment/facilities. So you say that this broadened investment in this research team results in skyrocketing profits. Are you just going to let that research team walk out the door because they didn't personally invest in ownership?

Ownership is a completely different animal...it is not an asset like employees. Ownership obviously should, and does, earn the greatest benefits from a burgeoning business. Any business owner knows that you HAVE to invest profits back into the business. Those employees are part of the business in the form of assets. You can't just shut them out. It's the equivalent of an owner choosing to stop paying rent on his headquarters because the headquarters didn't chip in money when he needed it. Employees, by the very definition of the word, are NOT required to become part of ownership. The owner certainly isn't "obligated" to share profits, but to NOT do so is a serious tactical error, imo.