| Equitable Trading is an idea that is, at the moment, just an
idea. As such it is open to free discussion and debate by everyone
and, as "an idea", cannot be owned. The basic principles
(in simple terms) of Equitable Trading (ET) are as follows:
1. Year-end declared profits (payable normally
by the Company solely to the Shareholders) are split equally
between the Shareholders and the Employees. For the avoidance
of doubt, employee salaries reflect the norm.
2. The Employees share of the declared profit
in (1) above, is then split equally between each and every one
of the employees in the company (after a three month qualification
period) on a pro-rata basis depending on the amount of time (hours)
given by the employee to the Company during that dividend period.
By way of example:
If the Company makes, say, annual profits of £1million and
declares dividend profits of £500,000 (retaining £500k
in the Company, say, for expansion), that dividend is then divided
50% to the shareholders, and 50% to the employees. If there are,
for example, 10 full time employees; secretary, packer, MD, finance
director, etc., each will then share in £25,000 annual bonus,
regardless of rank.
The idea raises certain issues (for debate and further research), including
for example:
a. What tax liability should the employees bear
on their bonus? And if the scheme can be proven to be successful
should not the Government provide tax breaks/or a new tax scheme
for the payment of such bonuses?
b. Could employees take or receive non-voting
conditional shares (in different classes perhaps for each employee)
in the Company without any substantial (or preferably zero) capital
gains "hit" on acquisition and thereby be entitled
to receive the potentially more favourable tax benefits of receiving
income through share dividends?
c. If a company operating these principles
were ever floated on the Stock Market, should not a separate
stock market be created for such companies? i.e. they
have a different investment rationale and may not respond
(at least initially) to the standard market indicators
in the same way as traditional companies
d. What additional representation, if
any, should employees have at board level?
e. Would these ideas lead to more efficient
and profitable companies, thus attracting increased investment,
or would profits to shareholders be reduced leading to
lower investment?
Some perceived benefits of ET could be:
I) Increased employee involvement in the company helping to elevate employees
to a plateau whereby, although separate as a body to the "shareholders
body", they can have substantial influence on the company as a voice
representing 50% of the interest in the declared profits of the company,
which may lead to a greater degree of respect and balance between the parties,
and more particularly towards what each party "brings to the table".
Shareholders, as owners, will as per traditional company law retain ultimate
control of the company.
II) Possible increased company efficiency and thereby more substantial long-term
profitability on investments? Open to debate – please comment.
III) It retains adequate profit share (50%) and, thereby, motivation for the
original investor(s).
IV) Loyal work force more prepared to be responsible and accountable for errors
that are likely to lead to less profitability – e.g. owning up for
errors and finding better ways of discussing profitability/sales/efficiency
etc.
V) An equitable bonus structure; i.e. the secretary is as integral to the success
of the company as the managing director.
VI) It should be easy to replace staff (when required) if the bonus structure
can be proven to be beneficial.
VII) 50% of local profits of the trading entity will remain
in the local community. e.g. Pure Mint India would pay 50%
of the local profits into the Indian economy, rather than
draining such profits away from the place of their generation
to the corporate headquarters of multinationals in New York
and/or London (etc.).
VIII) Those local profits can, it is hoped, go towards both helping the local
environment and improving working conditions/labour law (if for no other
reason than the local employees, now suitably richer as a whole, will probably
be less inclined to, say, pollute their local river) and, in time, may put
an end to "cheap labour exploitation" by the world’s multinationals
of developing countries.
The logo above is an idea for something that could be potentially affixed to
products, much like the dolphin symbol or the re-cycling symbol, although
as a whole I am against branding. Imagine, however, going to a supermarket
and being able to choose between a "can of beans/worms (*delete as appropriate)" with
the logo and one, perhaps, without the logo. By offering the consumer an
assurance not dissimilar, metaphysically, from that provided to art collectors
and dealers by the written provenance of a painting, consumers would then
be allowed the opportunity to choose where and with whom they spend their
money and on which types of companies and products – an idea not too
dissimilar from the equitable investment policies operated by banks such
as the Co-Op (and I am sure others).
The idea is offered
as a possible solution to the inequity in current system that
may lead to a more equitable distribution of the resources
and profits of the Company to all those who
made it "happen", from the engine room to the captain’s
helm. Is this really too difficult for us all to put into
effect?
Anthony Hall. Sunday 9th March 2003
|
