Documentation – links

This page includes a selection of links or references to publications relating to the topics we have discussed on this site.

Profit sharing – selection of press articles

15/01/2010 – bNet:“7 Ways to Build a Loyal team”:An article full of good sense to remind us that financial incentives alone are not enough to create a loyal workforce.

15/01/2010 – NY Times:“JP Morgan Chase Earns $11.7billion

14/01/2010 – NY Times:“Whose Bonuses are They?”:An editorial about American banking practices.

09/01/2010 – NY Times:“Banks Prepare for Big Bonuses,and Public Wrath”:In which we discover the share given to labor can reach 50%,which means a very low capital consumption or exaggerated remuneration.

Books and academic articles

William Davies (2009) “Reinventing the Firm” (“We have a once in a lifetime chance to renew our idea of what a company is for…”):A rapid overview of structures of governance and alternative solutions to an excessively rigid vision of the capitalist company. In Great Britain,a land of liberalism,a cooperative tradition still thrives. There are also companies in which management and employees hold a fairly substantial share of the capital. And some entrepreneurs,when the time comes to step down,have succeeded in progressively selling their companies to their employees. These various case studies provide excellent examples of alternatives to companies being owned by investment funds with a short-term outlook. This work is available for free from the website of the think-tank Demos.

Stuart White (2009) “’Revolutionary Liberalism’? The Philosophy and Politics of Ownership in the Post-War Liberal Party”:In post-war Britain (1945-1989),liberalism was seen as an alternative to the excesses of capitalism and communism. The doctrine of “Ownership for All” meant that everyone owned a share of the capital of the company in which they worked. Nicely putting into perspective current thinking on corporate governance,this article provides an opportunity to follow the evolution of the thinking of Marcel Loichot and his pan-capitalism,of James Meades and his capital-labor partnership,as well as Weitzman.

Pfeffer and Sutton (2006) “Hard Facts,Dangerous Half-Truths &Total Nonsense:Profiting from Evidence Based Management”,Jeffrey Pfeffer and Robert Sutton,Harvard Business School Press:An excellent book on management which includes an essential chapter on financial incentives.

Kaplan and Norton (2006) “Alignment:Using the Balanced Scorecard to Create Corporate Synergies”,Robert S. Kaplan and David P. Norton,Harvard Business School Press:A book which outlines the non-financial elements of the alignment interests,which it would no doubt be a mistake to ignore.

Jensen (2003),“Paying People to Lie:the Truth About the Budgeting Process”,Michael C. Jensen – European Financial Management,Vol 9,N°3,2003,379-406:An excellent examination of the system of variable remuneration based on surpassing budgetary objectives. A very useful article for those responsible for the implementation of policies of variable remuneration. The WorK is K method follows these recommendations and brings practical solutions.

C.C. Lin and al. (2002),“Profit Sharing as a Worker Discipline Device” – JEL 2002 – Chung-cheng Lin,Juin-jen Chang,Ching-chong Lai – Economic Modeling 19 (2002) – JEL classifications:J41;J023;J823:Along the same lines as Shapiro and Stiglitz (1984),invoking the threat of unemployment as an incentive to performance,this article demonstrates that profit sharing can replace the threat of unemployment in a situation of full employment.

Jensen (2001),“Value Maximization,Stakeholder Theory,and the Corporate Objective” – Working paper – Michael C. Jensen (http://papers.ssrn.com/abstract=220671):A reflection on the goals of the company,Kaplan and Norton’s balanced scorecard is taken to task,the “stakeholders” theory is critiqued on the basis of the legitimacy of certain stakeholders,but unfortunately Jensen’s own proposition is not entirely clear. The article ends on a Churchillian position:“Maximization of shareholder value is the worst company goal,apart from all the others that have been tried.”

Jensen and Meckling (2000),“Theory of the Firm:Managerial Behavior,Agency Costs and Ownership Structure”,Journal of Financial Economics,1976,V. 3,No. 4,pp 305-360. Reprinted in Michael C. Jensen,A Theory of the Firm:Governance,Residual Claims and Organizational Forms (Harvard University Press,December 2000) available at http://papers.ssrn.com/abstract=94043:A landmark article on agency theory.

Wadhwani,(1987),“Profit-sharing and Meade’s Discriminating Labor-Capital Partnership:A review article.” S.B. Wadhwani ,Oxf. Econ. Pap. 39 (1987),pp. 421–442:An article which sums up James Meade’s theories on profit sharing (Nobel Prize for Economics for his contribution to international trade).

Merton (1974) “On the Pricing of Corporate Debt:The Risk Structure of Interest Rates.” R.C. Merton,Journal of Finance,29,2 (1974):An essential article on evaluating corporate risk in the pricing of debt,which parallels the behavior of employees faced with the same risk and which is the basis of our approach.