There have been schemes proposed for ‘Productivity Gain Sharing’. These are usually based on payment of cash bonuses as a result of assessment of arbitrary productivity indicators.

It is suggested that the payment of this type of bonus is undesirable for the following reasons:

1. impact of the bonus is essentially short term;
2. areas such as occupational health and safety, and environment can be neglected by workers to more easily achieve payment of the bonus.

The new approach to quality management offers an opportunity to implement Productivity Gain Sharing in a much more effective manner.

The usual implementation of ISO9000 quality management systems involves documentation of work practices as ‘quality system procedures’, development of quality policy and mission and vision statements.

ISO9000 standards place a strong emphasis on ‘continuous improvement’ and the next phase may be implementation of Total Quality Management TQM. This activity concentrates on improvement of work practices through worker participation.

The normal sequence of events of TQM is:

1. plan a quality improvement to a process and document the process ‘warts and all’;
2. brainstorm for possible solutions using a group activity, and implement changes to the process;
3. check that an improvement has actually been achieved (use statistics) and that other processes have not been adversely affected;
4. act to consolidate the changes by updating process documentation (such as quality system procedures).

Thus the effectiveness of the quality management system depends on achievement of a high level of worker participation.

Employee Share Ownership (ESO) programs offer an excellent opportunity to drive the ‘continuous improvement’ concept and achieve a higher level of business competitiveness.

It is suggested that public listed companies should sell shares to their employees at a discount rate dependent on increases in productivity.

Productivity of a company can be assessed by calculating the ratio of ‘profit’ to ‘wages bill’(provided there is not a greater investment in plant in any given year). This calculation takes into account gains and losses due to the management of the organisation.

The formula for calculating the share discount should be made available to the employee.

The advantages of this approach are:

1. the ‘continuous improvement’ program is driven by self interest;
2. employees gain a sense of ownership;
3. impact of rewards is long term;
4. the shares can be converted into cash and provide a ‘cash bonus’ if required;
5. employees can have an input at shareholders meetings and direct organisation policy.
6. this would effectively implement a more participative form of Industrial Democracy.

To the employee this approach should look like ‘going to the races and riding the horse he/she has bet on’. Nothing motivates like ‘a piece of the action’.

Alan Cotterell

5 July 1995