PRODUCTIVITY AND PROFIT SHARING

How best to attain productivity improvements is an issue of both concern and dispute. Among the many proposed solutions to the productivity problem, one suggested approach to improved productivity is the formation of self-directed work teams within organizations to replace the more traditional hierarchical structure (Wellins, 1992, pp. 24-28). An older remedy that is receiving renewed attention is the use of profit-sharing to boost productivity (Collins, 1993, pp. 77-104).

Some organizations have developed productivity improvement programs that include elements of both team building and profit- sharing (Schatz, 1992, pp. 127-128). This research examines the effectiveness of productivity improvement strategies that contain elements of both team building and profit-sharing.

A concern with organizational performance is one of the more significant of the problems which confront organizational managers in the last decade of the twentieth century (Hakim, 1993, pp. 46-49). The costs to an organization of sub-standard performance involve profit deterioration, the diversion of financial and human resources from production to

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h employees. While an Improshare Plan at a Firestone Tire & Rubber plant failed to provide an annual bonus payment one year, the workers, nevertheless, demanded that the plan be retained (Forbes, 1985, p. 50). Nationally, a General Accounting Office study of 1,000 gainsharing plans (Scanlon, Rucker, Improshare, or profit-sharing) found that those plans that had been in force for five-years or longer averaged 29 percent savings in labor costs, while those plans which had been in force for less than five-years averaged 8.5 percent savings in labor costs (Cooper, 1992, pp. 471-490. Gainsharing organizations also reported 47 percent fewer employee grievances than the national average, and absenteeism and turnover rates which were 36 percent lower than the national averages. The profit-sharing concept is widely employed in the American automobile manufacturing industry. Regardless of the effects of profit-sharing on the productivity of the industry, however, the industry has had difficult in competing with foreign manufacturers. The Boeing Company has fared much better with profit-sharing by simultaneously maintaining international leadership in the air transport manufacturing industry. Being more efficient than oneÆs competitors,
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Approximate Word count = 6711
Approximate Pages = 27 (250 words per page)

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