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Economy of the enterprise - Pokropivny SF

15.6. Participation of employees in the profits of the enterprise (institution, organization)

The objective need for such participation and its various forms

Participation in profit (income), or incentives for staff through profit, consists in the allocation of a certain part of it (between employees) of the enterprise (organization). Such distribution of a part of the profit (income) may be urgent (monthly payments) or deferred (for several months or even years), and may take the form of cash payments or placement of shares issued by the enterprise to the employees of the enterprise (organization).

The objective necessity of applying various forms of participation in the profit of an enterprise (firm) is based on the fact that even the most perfect individual and collective wage systems are not always capable of generating the true desire of each employee to be involved in a consistently high overall performance.

A fair, clear and understandable mechanism for distributing a part of the profit between "economic agents" - the owner, the administration, specialists, workers - is increasingly becoming crucial not only for creating a positive social and psychological climate, but for the prosperity of any enterprise or other business entity.

Additional payments from the received profit depend on many circumstances, including, in particular, the level of production costs, prices, competitive positions, the financial situation of the enterprise, etc. Their size is determined by a separate agreement concluded between the relevant parties in the framework of collective bargaining at the enterprise - during the conclusion of tariff agreements.

Participation in profit systems of an enterprise differentiates depending on indicators and means of motivation of work (Figure 15.13).

When designing a participatory system based on a profit measure, the difficulties in determining the direct relationship between its growth and the work of a particular employee should be taken into account. In this connection, motivation systems associated with the results of production activities are often applied. Thus, the systems of participation in the enterprise's profits are transformed into participation systems in the overall results of its activities.

The merit evaluation system provides an assessment of the employee's efforts and behavior for a number of factors. For each factor, a scoring system is defined, and appropriate norms are established for calculating the assessment at different levels. The indicator of the efficiency of the employee's activity is periodically calculated. The final results characterize the corresponding level of additional remuneration (in excess of the salary according to the tariff).

The incentive systems for increasing specific volumes of products, works, sales, etc., can be most successfully applied in relatively autonomous structures with a complete production cycle.

Such structures in most cases have their own budget, which is proportional, for example, the volume of sales of products. Therefore, staff should feel a direct connection between the efficiency of work and the success of the enterprise in the market, i.e., the level of its profitability first of all.

The system of profit distribution, based on the growth of labor productivity, is designed in such a way as to reduce the specific labor costs by encouraging higher performance without increasing the fixed costs associated with increasing labor intensity.

One of the most known and at the same time simple systems is the definition of the so-called common coefficient. The latter is calculated as the ratio of the total costs of labor and the volume of products sold. This ratio, which is stable in enterprises, for example, in most manufacturing industries, is taken as the base level of the coefficient. Using this base factor and taking into account the volume of output that is realized for a certain period, find acceptable labor costs. Then these costs are compared with the actual wage. If the actual costs are lower than the allowable ones, they pay a premium to the staff at the level of 40-75% of the savings received (profit growth).

The system of collective incentives is applied, as a rule, when the encouragement of employees through their participation in profits is possible only in a collective manner. In this case, the group bonus is distributed in most cases in the same proportion as the basic salary. The advantage of this approach (with certain disadvantages) is that the group is guaranteed a relatively fair distribution of the scope of work.

More sustained interest of workers in the activities of enterprises, especially in the renovation of production and the strengthening of financial condition, is ensured through their participation in property. It is implemented in most cases by providing employees with shares in their own enterprise.

The ownership of shares in this case has a greater value than only participation in the profit by obtaining the appropriate dividends. This system not only identifies the interests of employees and the enterprise, but also mobilizes personal savings of citizens to invest in production.

Different systems of participation in profits, which are sufficiently valid to encourage staff to achieve the best overall results of management, in themselves do not yet solve the problem of the formation of an effective mechanism for motivating work in the enterprise.

The functioning of such a mechanism depends on the positive influence of both internal and external factors. But in any case, the organization of the personnel remuneration system requires, as a basis for a predictable management style, which provides for the creation of flexible structures in accordance with the development of socio-economic processes at the enterprise and in society. At the same time, it is very valuable to carefully study, summarize and use the foreign experience of employee participation in the firm's profits.

Foreign experience of participation in profit

In countries with a developed market economy, the participation of workers in the profits is one of the strongest methods of motivating successful management in corporations (firms).

Participation in profits is widespread, for example, in Japan. This is one of the main reasons for the high level of labor motivation of workers and the competitiveness of manufactured products. In addition to monthly premiums of various types, the permanent workers of most enterprises are paid twice a year from part of the profits a so-called bonus. On average, is it over? Earnings, and in favorable years for the company sometimes reaches the sum of a six-month basic salary of the employee.

Over the past two decades, the number of firms practicing the distribution of shares among staff in the United States has increased by almost two times, and the number of employees in them has approximately tripled and accounted for more than 10% of the total number of employed in the economy. In England, during this period, the number of owners of shares has tripled and exceeded 8 million people. (Approximately 20% of the adult population).

The predominant number of owners of "working shares" is small proprietors. They do not have a real impact on the firm's strategy. Therefore, trade unions give priority to collective forms of financial participation in capital, not directly, but through investment funds, cooperative trade union banks and other forms of collective ownership of shares.

The most complete and original these participation systems are used in Sweden. Collective participation of workers in the profits and property (capital) of the enterprise in the form of workers' funds trade unions use, among other things, as a means of control over private property and even for the entire economy. In a variety of funds, collective ownership of shares combine participation in profits, in equity and in management. To introduce this form of economic democracy in Sweden, special prerequisites have been created: legislation regulating the participation of staff in property and management; High level of trade union organization; Presence of necessary knowledge and management skills of trade unionists; Active government assistance; The existence of a theory and a program of actions emanating from a special Swedish model of social development.

Recently, many enterprises practice distribution of stock options, i.e., subscription to shares or sale of those on preferential terms, but without the right to resell for, for example, five years.

The use of original systems of participation of employees in profits and ownership (capital) in domestic enterprises (organizations) used in foreign firms will undoubtedly promote the development of highly efficient (financially stable, profitable) systems of management, more intensive entry into the world market.

Questions for self-study in depth

• Methods of measurement and indicators of the level of labor productivity in enterprises (in organizations) of different forms of ownership.
• The factor-based method of forecasting labor productivity in diversified manufacturing enterprises.
• Comparative characteristics of different models of motivation of work activity of separate groups of personnel.
• Problems of implementing the principles of motivation in the practice of the enterprise (organization).
• Objective necessity of application of different forms and systems of labor remuneration of the personnel of the enterprise.
• The practice of state and contractual regulation of the wages of certain categories of personnel in enterprises of Ukraine.
• Kinds and practice of application of additional payments and extra charges to wages of separate categories of the personnel.
• Modern problems of formation and application of bonus systems for personnel of enterprises and organizations.
• Methodical approaches to justify the size of bonuses and determine the effectiveness of the employee bonus system.
• Participation of workers in the profit (income) and ownership (capital) of enterprises: foreign experience and prospects for use in domestic firms.