The airline announced Thursday it’s giving 60,000 employees a $667 million profit-sharing bonus. That means some eligible employees will soon receive 12.2% of their annual salary, which is the equivalent of roughly an additional six weeks of pay. Other employees will get the contribution added to their retirement accounts.
Southwest’s profit-sharing plan has been in place for 46 years. It was the first airline to enact this kind of bonus, and it has given nearly $6 billion to its employees.
Size doesn’t matter in this case. Employee payouts are good for business, according to Joseph Blasi, director of the Institute for the Study of Employee Ownership and Profit Sharing at Rutgers University.
“Research shows that cash profit-sharing plans, combined with a supportive corporate culture that encourages employees to offer suggestions and participate in solving company problems, can reduce turnover and improve corporate performance and personal motivation.”
Direct cash payments are not the only way companies can share profits with workers. Some make profit-sharing contributions to workers’ retirement accounts or pay them in stock.
Profit sharing is one way to demonstrate what members of the Business Roundtable have said is a corporation’s purpose: to serve all stakeholders, including employees.
Delta and Southwest are hardly the only companies to offer a cash-based profit-sharing plan. But such plans are most common in the airline and auto industries, Blasi said.
Such high payouts are not the norm, however: 38% of adult US workers said they receive cash profit-sharing, but the median amount reported was just $2,000, or 5% of pay, according to a 2018 survey conducted by NORC at the University of Chicago.
–CNN Business’ Jeanne Sahadi contributed to this report.
Source : CNN