A woman making a transaction at the cashier of a store.

The future of business: profit sharing

Big businesses are often guilty of not paying their workers as much as they could. So could profit sharing by big businesses boost morale amongst workers?

A lot of us have experienced the draining feeling of working in a minimum wage job. Often working for the big retail outlets, the repetitive motion of a retail job can feel exhausting at times.

Stuck in this repetition being ‘used and abused’ by many big businesses can cause workers to begin resenting the jobs they have.

Another reason many of us may dislike working in retail jobs in particular is that we aren’t paid as much as we could be.

An aisle down a supermarket.

Working for the minimum wage can make the work sometimes feel unfulfilling when compared to the rate of pay of other Australian businesses.

Many may begin to feel that their work is keeping them in a rut.

So why is it that successful, big businesses aren’t sharing more of their profits with the workers?

Could profit sharing boost morale and make the workers feel happier about the job they have?

A little motivation goes a long way

Professor Chris Doucouliagos from the Faculty of Business and Law at Deakin University believes that part of the reason for low wage growth in recent years is the decline in unionisation.

“Employee bargaining power has weakened and job insecurity has increased.”

With many businesses simply not providing the opportunity to move from a casual position into part or full time, workers are feeling nervous about the security of their careers.

If companies were to share their profits more equally amongst workers Professor Doucouliagos says “I believe that if workers share profits they are motivated to work harder.”

A coffee shop bustling with customers.

Professor Doucouliagos’ research suggests that on average, employees at companies with profit-sharing worked harder, took greater care, and felt more connected to their colleagues and workplaces.

An employee may be more willing to stay a few minutes after quitting time or offer assistance to their co-workers who are having difficulty. It may also spark more sense of pride within their work.

Free-riding is also a possibility, especially in larger groups, so this needs to be counteracted with good workplace policies and culture.

The importance of unions

This data highlights the help that unions give to businesses to assist in becoming more profitable and productive.

Professor Doucouliagos says “It doesn’t necessarily mean you need a union presence to make profit-sharing work.”

But it is very helpful to bring in structured communication between employers and employees. Unions can also offer a voice for the workers to help align the interests of both employees and employers.

“Employee participation in decisions, alongside profit-sharing, can help enhance a sense of ownership,” says Professor Doucouliagos.

With a sense of ownership comes the motivation to work harder and have a sense of pride in the work you are doing.

A team hard at work brainstorming in their office.

Giving workers the right to a voice will only help create a better working environment for all involved.

“One can make a differentiation between all workers in a firm underpaid versus some workers underpaid more than others.

“Inequality is a major factor in mental responses to pay.”

The effects of mistreating workers

It is not only sharing profits that can boost morale. It is treating workers like living, breathing humans.

A group of employees laughing and smiling at a table.

Many big businesses take the ‘use and abuse’ approach especially when it comes to casual workers. Unfortunately this is an outdated tactic that will not make workers more motivated to help.

On the contrary, it may in fact cause workers to begin seeking work elsewhere which can land the business itself in a whole lot of trouble. No workers means no one to serve customers.

It’s simple.

Treat workers with respect and they in turn will respect their workplace.

Are you a Deakin academic with a passion to share your research? You may be interested in writing for us.

Find out more