Productivity is an essential component of lasting corporate success. It is also a critical ingredient in the recipe for making a vibrant and prosperous community.
Economics recognizes that both capital and labor make contributions to productivity through the functions of investment and production. Enhancements to productivity can be obtained in multiple areas, including technological advancement, corporate expansion, market penetration, and product development. Sustained productivity growth, however, is predicated upon continual process improvement and market innovation.
Identifying precisely “who” and “what” are contributing to productivity is challenging. Because capital and labor interact, it is difficult to determine whether the positive effect is due to the man or the machine. Evaluating the contributions of labor alone is complicated, as people are productive both as individuals and in working together as a group. It is hard to imagine a situation where a competitive advantage is obtained without cooperation. Nevertheless, economics is theoretically geared toward atomistic contributions to productivity.
Making any significant achievement within a corporation or community requires input from a variety of entities having a willingness to commit their time and energy to a particular effort. Because the path to improvement involves making mistakes and learning-by-doing, patience is involved. Often short-term gratification must be sacrificed for long-term gain; incurring costs today in the hope of revenues tomorrow. This tradeoff affects both costs and profits. Because short-term profits are the predominant incentive for investment capital, and marginal costs are the key determinant of wages, favorable behaviors on either the investment or production front are not automatically rewarded. Attention must be given to asset development, if incentives are to be structured properly.
In this paper, I emphasize the importance of using specific asset-based methods and financial tools to fairly and efficiently distribute contributions to productivity. Corporations will find these methods equally desirable because they can be used to generate low-cost, highly-accessible finance capital. These incentive structures include the Employee Stock Ownership Plan (ESOP), as well as other financial instruments that are built upon the foundation of the ESOP. These include the CSOP (Customer Stock Ownership Plan), the CIC (Community Investment Corporation), and the CHA (Capital Homesteading Account).
Although these variations of the ESOP address a wide variety of situations, they have yet to be tax-qualified like the ESOP. I am hopeful that this will change. To cover the landscape of what is available right now, however, the structures that include the Community Development Corporation (CDC), the Community Land Trust (CLT), and the Individual Development (IDA) are investigated.
Because the future prosperity of individuals, corporations, and communities depends upon continuous improvement and innovation, contributions to productivity are of primary importance. Just as important is the creation of a life and work environment that is competitive, efficient, and fair.
|School:||University of Denver|
|School Location:||United States -- Colorado|
|Source:||MAI 48/06M, Masters Abstracts International|
|Keywords:||Asset development, Community development corporation, Community land trust, Defined contribution benefit plans, ESOP, Employee Stock Ownership Plan|
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