Profit Sharing

The dividing of business gains among workers, customers, and the company — the governing principle of George F. Johnson’s Endicott-Johnson experiment as told in George F. Johnson and His Industrial Democracy (William Inglis). Johnson’s recurring formula: “Every improvement we make, every improvement and every saving we effect, is divided into three parts — the workers’, the consumers’ and the company’s. That is one of the best ways to make a business successful and keep it so.” The aim was to “save every penny possible in shoemaking, from the raw hide and crude rubber to the finished article, and divide the savings with those who make and those who wear the shoes.”

This sits inside Johnson’s broader Square Deal / “Live and Help Live” philosophy and his belief that “no man can own a business” — it “belongs to the customers, to the workers, to the community” (Employee Ownership). The mechanism that made sharing pay was incentive design (Incentives): premium pay and piece work rewarded industry, where “time wages slow a man down.” The book frames this as the alternative to the extractive default (“see what you can make of the business, not make out of the business”) and as a “premium pay without a union” middle path — neither open-shop nor closed-shop — that Sam Gompers conceded already outpaced what a union could ask. Johnson explicitly rejected Henry Ford’s “employer need not love employee, only do justice” maxim as a path to failure.

Where this appears

• George F. Johnson and His Industrial Democracy — Johnson’s “divided three ways — workers, consumers, company” principle as the engine of Endicott-Johnson’s industrial democracy.