Making work pay
These cases show how companies have succeeded in making work attractive by means of financial incentives and improving earnings potential. The focus is on innovative profit-sharing schemes. A key criterion for consideration of company examples is that such schemes are additional to standard salary arrangements. Other forms of financial employee participation, such as share ownership schemes and involvement in decision-making as shareholder employees are included.
- Salinen Austria, Austria: Make work pay – make work attractive
Austria’s leading salt producer Salinen Austria AG, which has about 340 employees, was state-owned until 1997. In the course of privatisation, the successful bidder offered a financial participation model for the employees. This model was in the form of a private foundation, which would hold 10% of the company’s shares. While the first dividend was put into a social fund, all dividends since have been equally disbursed to every employee.
- Tesco, UK: Make work pay – make work attractive
Tesco is the UK’s largest private sector employer. It has been running employee share schemes since 1981 and has continued to adapt these as new opportunities have arisen through government legislation. Tesco now has three share schemes in operation and large numbers of employees are benefiting from the company’s performance, as reflected in a steadily increasing share price.
- KEMA, the Netherlands: Make work pay – make work attractive
KEMA is a company specialising in technical consultancy, inspection, testing and certification. KEMA has introduced a profit-sharing system, based on the business results of the company, and a system of competence management. KEMA believes that the profit-sharing scheme leads to a greater focus on reducing costs in the company, while the competence management system supports the personal development of its staff and enhances corporate development.
- Opel Hoppmann, Germany: Make work pay – make work attractive
Opel Hoppman, a car sales and repair company, implemented a profit-sharing scheme in 1961. Employees receive 50% of the company’s profits. Financial participation is complemented by the influence on economic decisions by the workforce and its representatives and extended general participation rights beyond the Works Constitution Act. Direct participation at the workplace is practised in work teams.
- De Zeeuwse Stromen, the Netherlands: Make work pay – make work attractive
De Zeeuwse Stromen, a hotel and conference centre, has initiated an employee bonus system. Employees work in autonomous teams and the owners function as coaches. This approach is based on profit sharing and has proved successful for both employees and the hotel.
- Handelsbanken, Sweden: Make work pay – make work attractive
Handelsbanken is one of the major banks in Sweden, with offices in the Nordic countries and the UK. Handelsbanken has had a profit-sharing system in place for 30 years. When profits exceed the average profit level in comparable banks, one third of the ‘excess’ profit is transferred to a fund called Octogonen. All employees are entitled to a share of the fund, based on years of employment. At the age of 60, employees can withdraw their share of the fund.
- Grünbeck Wasseraufbereitung, Germany: Make work pay – make work attractive
Grünbeck, a medium-sized company producing water treatment devices, developed a system of employee co-ownership in several stages, starting from a profit-sharing scheme. Financial participation is embedded in the organisational culture and philosophy of social partnership. The majority of the employees are direct shareholders or silent partners of the company. The employees hold 46% of the company.
- Canal Bio, France: Make work pay – make work attractive
Canal Bio is a grocery shop with 18 employees. Two years ago, in place of a payment of two bonuses during the year, employees accepted, after initially rejecting, the introduction of a profit-sharing scheme. In spite of some administrative problems, the profit-sharing scheme is important for employees and allows them to become more involved in their work.
- Polyproject Sweden, Sweden: Make work pay – make work attractive
Polyproject Sweden AB is a small manufacturing company producing components and equipment for the treatment of industrial waste water. The company introduced a profit-sharing system, together with training and improved information, for the benefit of employees. The new system has contributed to improved flexibility and commitment among the employees and improved the overall performance of the company.
- RHI, Austria: Make work pay – make work attractive
RHI implemented a very simple and pragmatic share ownership scheme called ‘Four plus one share certificate’, in which the purchase of shares by employees is supplemented by free shares given by the company. The scheme has been developed as a joint initiative of management and the works council. Limited to the Austrian workforce in the beginning, it is now open to employees worldwide, covered by the same rules.
- Vodafone Omnitel, Italy: Make work pay – make work attractive
In July 2004, the Vodafone Group introduced a new share scheme, called Allshares. The Vodafone Group distributes shares free of charge to all full-time staff, including the approximately 10,000 employees who work for Vodafone Italia. In this way, Vodafone rewards its entire staff for their contribution to the Company's future and gives everyone, regardless of their role or status within the organisation, a chance to play a part in its success.
- Unipol Banca, Italy: Make work pay – make work attractive
Unipol Banca and the trades unions signed an agreement introducing a company savings scheme that is financed by means of three different sources: a percentage of the worker’s wage, a percentage of the end-of-employment allowance and a consistent contribution provided directly by the company. The bank, through an insurance company, foresees minimum guaranteed earnings. The company contribution to the scheme is higher than the average rate, and negotiation impacts on the final amount of contributions.
- HBOS, UK: Make work pay – make work attractive
HBOS is one of the largest financial institutions in the UK. HBOS places considerable emphasis on the ‘Total Reward’ package that it offers its employees, which has been negotiated with the trade unions. Essential to this package is a range of share-ownership schemes that provide an opportunity for all employees to have a stake in the company and benefit from its profitability and stock market performance.
- SSAB, Sweden: Make work pay – make work attractive
SSAB is a major steel company in Sweden. For over ten years, a profit-sharing scheme has been in operation in the company, whereby profit above the goals set by the board is shared among employees. All employees receive the same amount. The shared profit can either be taken in cash or be paid into a pension fund.
- Stasto Stocker, Austria: Make work pay – make work attractive
Stasto Stocker KG, an Austrian family-owned wholesale and service company in the automation process sector (pneumatic, hydraulic, industrial fittings) has put in place a profit-sharing scheme called ‘Mit-Unternehme.’ The aim of the scheme is to combine sustainable economic performance with long-term commitment of employees to the company on the basis of transparency, high-trust relationship and participation.
- Alcatel, France: Make work pay – make work attractive
Alcatel, an international communications provider, has implemented a wide range of measures related to profit-sharing in France. All the measures reflect the company’s desire to offer attractive salaries and benefits to its employees in order to remain competitive. Alcatel’s policy for granting stock options is extensive and thus very significant.