R,ossmon Retoil Yqrds Splir $36(),0()() Among Employes Over ll Yeors in Compony's Profit-Shoring Plon

(Ercerpts from a tolk gizten at the monthly Bi,ltrnore hotel meeting, Ianaary 8, of the Southern Cali,f ornia Retail Lumber Assn.)

By FRANK R. HILL, Vic e- president and, generd rllanager, Rossrnan Mill & Lurnber Co., Long Beach

Profit sharing should not be confused with bonus plans for selected individuals or incentive plans for increased production; profit sharing is an agreement freely entered into, whereby employes receive shares, fixed in advance, of the profits.

Perhaps the first record of profit sharing in the United States was by Albert Gallatin, Secretary of the Treasury under

Jefferson and Madison, in his New Geneva Pennsylvania Glass Works, who stated that our democratic principles should be applied to our industrial operation and not be restricted to political processes alone. it Profit sharing is practiced in the United States today to a far greater extent than is realized. Twelve years ago the num- of enterprises was estimated at less than one thousand, four years ago the number was over twelve thousand, at which

:time over one hundred profit-sharing pension plans alone were processed monthly by the Internal Revenue Department.

Profit sharing is practiced by such companies as Eastman

Proctor & Gamble, Jewel Tea Co., Geo. A. Hormel

& Co., Sears Roebuck & Co., and Motorola, Inc. We have been unable to find any retail lumber companies listed, although there is a wholesale company in Chicago, Marsh and Truman, iwhich has operated a successful profit-sharing plan since 1916.

The information we have on profit sharing, other than our , own experience, comes from a revised profit-sharing manual published by the Council of Profit-Sharing Industries at the 'First National Tower. Akron. Ohio. i Our profit-sharing plan started in 1946. In that year we began paying 5/o of our profits annually to our Office, Sales

Lu-Re-Go's tProfit Plon' Form Now Avoiloble to All Deqlers

The Lumber Dealers Research Council announces that its Profit Plan booklet, originally prepared under sponsorship of the Council for its Lu-Re-Co dealers, is being made available to non-member lumberyards throughout the country. Briefly, the Profit Plan shows the lumber dealer how to project audit figures from the past three years into a plan for producing next year's profit and contains the forms on rvhich to do so.

By using the Plan, the dealer knows, at the beginning of the year, his approximate expenses and what level of sales he must attain to reach the net profit he desires. If the sales level appears to be too high .for his location, he is prepared to make adjustments in expenses and costs immediately rather than at the end of the year when it is too late.

For lumber dealers desiring a copy of the booklet, it is available for $2 by writing Rayrnon H. Harrell, Dept. 42-L6, Suite 3o2, Ring Building, 18th & M Streets, N.W., Washington 6, D.C.

and Supervisory forces and this, prorated, equalled 20.5/" of each employe's salary for that year. In 1947 we then increased the amount to 7/o of profits equalling 23%% of salaries ;1948 an increase to lo/o of profits equalling l7t/q% of salaries; 1950 increase to 20/o of profits equalling 34/o of salaries paid semi-annually; 1954 increase to 30/o of profits equalling 42%% of salaries paid quarterly; in 1955 at the same percent of profits equalling 50/o of salaries paid quarterly.

In this period of eleven years we have paid out in our profit-sharing plan over $360,000 and the percentages have varied frcm 3l/o to 8O/o of salaries during the difierent periods and averaged 33% over the entire eleven years.

Now, perhaps you are going to ask what happens when an employee receives a bonus in one period of. 80o/o, then one of 3t/a/o. There is a problem of convincing the employee that the figures are correct and also educating him to the fact that there are risks in business that he never realized before and that if he shares in profits he must also share in losses, but only to the extent of his part of the profits. With enough understanding, the employee will cooperate more and work harder to make a better showing in the next period.

Even though our company has not practiced the profit-sharing plan to the extent that the council recommends, since we have excluded all of our unionized produc.tion men, we feel that the plan has been highly successful in areas where it has been in effect.

We are now studying the advisability of extending our plan throughout the entire organization because we feel that if properly practiced, PROFIT SHARING is good business. It lowers costs, raises wages, increases profits. It is good human relations; it increases harmony within the personnel of the company; it is good psychology; it stimulates the individual so that he gives his best to the mutual work.

We do not expect more work from the individual, we expect and get better work and more cooperation. That is the real reason for any company to plan a profitsharing program.

Our PROFIT-SHARING PENSION PLAN is entirely separate from our Profit-Sharing Plan and becarle effective in 1956 and applies to profits of that year. Since it is a deferred payment plan, it must comply with Internal Revenue regulations and is financed with I3/o of profits as adjusted before filing Income Tax report. It is set up for the benefits of the same group of employes as our older plan except that it also includes the two men who are principal stockholders and owners and are not included in the first group. This difference was effected to give them a tax break, since all taxes on pension plan funds are deferred.

The funds are to be handled by the Bank of America Trust Department and ernployees receive the benefits in the following ways: l0/o per year with a maximum of 50/o upon separation from the company before retirement.

100/o either lump sum or deferred payments upon normal retirement or death.

All forfeitures to be prorated among surviving qualified employes yearly.

One-year qualification period.

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