Profit-sharing schemes gaining in popularity

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The Independent Online
Two-thirds of companies are operating some form of profit- share scheme for their employees, according to a survey by the Confederation of British Industry and Cable & Wireless.

The report, published yesterday, shows that the concept has grown rapidly in the Nineties, as the tax advantages have led many companies to introduce schemes. Companies say their expectations are being met in nearly all cases, with 75 per cent believing the schemes improve employee motivation and 67 per cent saying they focus employees on business objectives.

Of the organisations with profit-related pay schemes, 86 per cent have been introduced since 1990. For employee share-owning trusts, the figure is 71 per cent, for executive share options 24 per cent, and for share-based profit- sharing and save-as-you-earn schemes 22 per cent each.

Financial participation accounts for a large proportion of some companies' pay bills. Only 40 per cent of the 300 companies surveyed gave details. But 2 per cent of those that did said these schemes accounted for at least 21 per cent of the bill, with 7 per cent saying they amounted to between 11 and 20 per cent, and 29 per cent saying 6 to 10 per cent. Fifty-five per cent said they accounted for less than per cent of pay costs.

Trade union opposition also appeared to be diminishing, with only 5 per cent of those organisations that recognised unions saying they had negative attitudes.

Robbie Gilbert, the CBI's director of employment affairs, said: 'Financial participation and variable pay are spreading quickly. It could become a significant economic advantage as the pay bill may begin to adjust more quickly to changing economic circumstances'

'Fiona Colquhoun, human resources director at C&W, added: 'We have always felt that financial participation, in some form, was a significant contributor to employee motivation. It is good to see this view confirmed by the survey and also to gain greater understanding of which forms of participation are regarded by other employers as most effective.'

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