Happy at work the generosity factor oscar chan

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  • 1.THE PROFIT SHARING SYSTEM of San Jose Kitchen Cabinets ManufacturingHappy at Works conference September 28, 2011

2. COMPANY PROFILE OF Kitchen CabinetsSINCE 1982 3. Established: 1982Factory: Peoples Technology Complex, Carmona,Website: www.sanjosekitchencabinets.com.ph 4. Products : Kitchen Cabinet Wire Basket Organizer Dish Organizer Cabinet Counter Tops Kitchen Islands Average : 50No. of Employees 5. Branches :SM-MegamallSM-North EDSASM-Southmall (Las Pias)SM-Dasmarias (Cavite) 6. MISSIONTO CONTRIBUTE IN THE STUDY AND PROMOTION OF SOCIAL JUSTICE. (In particular profit sharing) 7. STRATEGY FOR SUSTAINABILITY To develop a profit sharing system that is both advantageous to the owners of business and theemployees. A system that resultsin better net profit to thecompany and a much larger totalcompensation for theemployees. A win win formula. In the end society benefits. 8. Period : 1982 toof the presentStudy 9. 50% PROFIT SHARING WITHEMPLOYEES BENEFITS ALREADY INCLUDED 10. PRINCIPLES1. In any economic activity, thereare always two partners thatare necessary: employees andcapital. One cannot existwithout the other, thus bothdeserve a share on the fruits of theres partnership. 11. 2.Before sharing the profit, wemust satisfy the basic need of each partner. Employees needto receive a regular income to maintain their physical andmental health. On the otherhand, capital needs to receiveadditional funds to correct its value due to inflation. 12. 3.In any business organization,weight of responsibility differs oneach category of position.Supervisor has moreresponsibility than hissubordinates. Auditor has more responsibility than a clerk. 13. Also, since there are manyfactors that affect individualperformance such as talents,motivation, skills, attitude, age andphysical condition, each individualdiffers in performance from eachother. Thus compensation toemployees should also be based onWeight of responsibility andperformance 14. BASIS FOR PROFIT SHARINGDISTRIBUTION1. Weight of responsibility (Job Levels)2. Performance 15. COVERAGE All regular employees from the lowest up to the highest level 16. EXAMPLE OF INCOMESTATEMENT USING THEACCOUNTING SYSTEM WITH50% PROFIT SHARE 17. STEP 1. INCOME STATEMENT USINGCONVENTIONAL ACCOUNTING SYSTEM(in thousands of pesos) Sales64,918 100%Cost of Sales38,950 60%Gross Profit 25,968 Less Operating Expenses:A. Salaries & Wages9,100 Rental Expenses 2,952 Others8,212 20,264 31%B. Employees Benefits:SSS employer share,Retirement Funds Contribution,SL/VL conversion,Christmas party, etc.2,0363% Net Income3,6686% 18. STEP 2. INCOME STATEMENT USING 50% PROFIT SHARE ACCOUNTING SYSTEM (in thousands of pesos) NET PROFIT BEFORE TAX3,668ADDBACK : Employees Benefits 2,036NET INCOME 5,704LESS: INFLATION ALLOWANCE (Equity x Inflation Rate/Tax Provision) (P14,953 X (2.8% / .067) 625NET INCOME FOR PROFIT SHARING5,079EMPLOYER SHARE (50%) 2,540EMPLOYEES SHARE (50%) 2,540 19. STEP 3. COMPUTATION OF EMPLOYEES PROFIT SHARE(in thousands of pesos) EMPLOYEES PROFIT SHARE 2,540LESS: Employees Benefits(as advanced by the company)2,036NET CASH FOR DISTRIBUTION 504 20. STEP 4. NET INCOME FOR THE COMPANY(in thousands of pesos) COMPANYS PROFIT SHARE 2,540ADD: INFLATION ALLOWANCE 625NET INCOME 3,165 21. ADVANTAGES1. Compared to a company with no profit sharing,all other things being the same, in the long term(at least ten years), the companys totalprofitability will be better. The following are mybases.a) A period of more than 20-yr. test (1987present).b) Employees engagement study defined as themeasure of emotional connection that anemployee feels for his organization that influencesthe employee to exert greater discretionary effortto his work. Worldwide average is 12%. Only onein seven employees worldwide is fully engagedand willing to go the extra mile for his company.(www.management-issue.com)c) Proverbs 11:24-25. Some people spend theirmoney freely and still grow richer. Others arecautious, and yet grow poorer.Be generous, and you will be prosperous.Help others, and you will be help. 22. 2. It is less difficult to manage the employees3. It can do away with some of the stressful part of a CBA 23. 4. Profit sharing is contributory to social justice and therefore to long term peace5.Evangelization of theemployees will be more effective (For Christian businessmen) 24. RESULTS1. The principles holds for the last 24 years. In the words of a friend, Vic Villegas: The sustained long-term viability of the business appear to be avalid empirical evidence. 25. 2. Average Return on Equity from1987 to 2010 is 34% after tax3. Cash distributed to employeesfrom 1987 to 2010 is about 24M 26. CONCLUSIONThe devil is afraid of social justice.Let us not forget that we still belong to the early Christians. C.S. Lewis