Workers on the Board


Making sure the profits of a company are distributed fairly, has been looked at in many ways.    

What is Fair?

Firstly the person setting up the company has invested their money, they are the ones taking the risk, so they, quite rightly, expect a reward for taking that risk. In the vast majority of cases, this business was not done alone, so how should the profits be distributed. Well if it was one person taking the risk, then they should take all the rewards. If the people working for the person are unhappy, then they should just walk away. This has two effects, one the person who set up the business, if they are as good as they think they are, will just replace, the workforce, and if they were under paying their staff, will pay a slightly higher wage?

increase their rewards

Two, if the person leaving is crucial and has specialist knowledge, they will be better off with another company. The firm they have left, will have to increase their rewards to this specialist person, or replace them. If they don’t increase the rewards, they will earn less money and leave the company open to competition from the person leaving, or another company setting up. The object lesson is clear either reward your workers fairly, or have to work alone? Efficiency soon starts to affect the lone worker, who wishes to expand, they find they can’t, if they do not remunerate their staff properly. The above scenario is for small setups or individuals graduating from self-employed to company status.  

fairly distributing the earnings

Larger firms, employing more staff, do need to ensure they are seen to be fairly distributing the earnings, especially if the profits are high. This can be done by way of bonuses, or a share in the profits. The owner or owners who invested the money, usually the Directors, are going to want a larger share, they have taken the risk, at least one of them, has had the vision or hutzpah to start the company in the first place. But as the old adage used to go, behind every great man there was a woman, behind every great entrepreneur there is a team of key workers, helping them earn the money. This should always have recognition, Charles Dickens knew what he was doing when he wrote ‘A Christmas Carol’, and had Ebenezer Scrooge, realising he owed Bob Cratchit more than just a begrudging day off work. One thing Dickens failed to realise though, was that where there is a wide share ownership, and profits are pursued, there is little poverty. Dickens knew nothing about efficiency paying wages, he merely saw the stockholders reducing wages to increase profits, this takes us to our next part.  

So called Unions

Workers being represented on the boards of directors, theses shouldn’t be Union representatives, unless that ‘Union’ is strictly within the company that the board represents. So called Unions representing people from more than one company, always results in blackmail, the blackmailing may be well meant, but it is usually being aimed at badly run companies, but then hits the firms who are efficient and well run hardest, because they are the ones making the highest profits. In both Germany and Japan it is normal practice in medium to large firms, to have shop floor workers represented on the Board of Directors. This results in the ‘Workers’ having a voice in the Boardroom, but also it breaks down the, us and them mentality. The workers find out why a company is doing well, coasting along, or struggling. The Directors, learn about the concerns of the shopfloor, and usually get ideas on improvements to the business.  

reduced the working hours

People enjoy working for successful companies, where the workers are in on the deal, they will tolerate a much higher degree of upset, than if they are marginalised. During the 2007/08 Financial crisis, many German Companies reduced the working hours or take home wages of the whole workforce. Now a word before we go further, most of these workers had some savings, they were paid higher than most in the world, but crucially also saved more. So when the belt tightening came, the various workforces agreed. With most people this meant using their savings, to help fund their day to day living, and cutting down on everything, necessities included. By 2009 and certainly 2010, German industry was back up and running and exporting more than ever. Meanwhile in UK/USA the workers were looking to get a job back? Jobs, that had the companies been run on a better model, would have never been lost in the first place. Shareholder entitlement, and it is just that entitlement, not a right. In UK companies listed on the London Stock Exchange are called Public Limited Companies, or Plc, these can be distinguished from Private Limited Companies which carry the suffix Ltd, the difference is that a Plc has Shares also called Stocks that can be bought and sold by any member of the Public.  

some joker called Mark Carney

This should be noted, because when Politicians say they wish to Nationalise a company and put it into Public Ownership, they are basically lying. A Nationalised industry is Government owned and run by the Politicians, Nationalised Industries are NOT owned by the Public. No person in the UK has a share certificate for the Bank of England, a Nationalised Industry. At the current time of writing misrun by some joker called Mark Carney, and no the Public didn’t vote him into position, he was selected by a group of people who were given this permission, by the Government. No public input whatsoever. Just a couple of years ago, the Plc BP, former part Government owned British Petroleum, cut the paydeal to CEO Bob Dudley by 40% when the shareholders gave a no confidence vote, to his bonus. That is a publicly owned company, in which any UK citizen (or indeed US citizen) can buy stock. While it currently doesn’t have any ‘workers’ as board members, this is a ake forwards looking company and one that if the idea takes hold will embrace the idea.  

shares incentive scheme

Indeed BP Plc along with the majority of the FTSE 100 companies has a shares incentive scheme, for the workforce, many of these schemes, allow members of the company to buy the shares at a fixed price, usually at a discount to the quoted price. This all goes towards increasing the spread of wealth, many people benefitting from doubly, if they take their dividend in more stock and not cash. In April 2019, Ferguson, another FTSE 100 Company had a ‘Sharesave’ scheme in place where employees of the company could apply for shares at £39.10 each. The London FTSE price had just plummeted to £48.00 and recovered to around the £52 mark, due to the vagaries of the market. The upshot was that employees, were given the chance to acquire shares at 25% discount (or 18.75% if you take the lower figure), this is employee wealth redistribution in action, not fantasy Socialist claptrap.  

surprise out of the blue

Some years ago an acquaintance, told me they had a pleasant surprise in the post, they had just received a letter asking if they wanted to accept the offer price for her shares in a company? This came as a complete surprise out of the blue, because she had ceased working there a good 20 years earlier? She had worked for the company for a few years, and when she left had cashed in her shareholding. What she had forgotten was that her dividend, had been paid in shares, and these hadn’t been cashed in. The cheque she received, was for more than her original stockholding? Stockholders have the advantage that with well-run companies, the shares are increasing in value, while they the stockholders go about their daily lives, doing other things. Another point Socialists both hate, and do not understand.

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