By Thea Jarvis

When the U.S. Catholic bishops wrote their pastoral on Catholic social teaching and the American economy, they might have had Robert Strickland in mind.

Strickland, current chairman of Lowe’s Companies, Inc. headquartered in North Carolina, is an enthusiastic promoter of economic collaboration in the workplace. He has spent 27 years with a company that has historically recognized worker rights to stock ownership, a policy that has led Lowe’s on the road to increased productivity and an impressive profit margin.

“If our nation is to rise to the challenges before it,” the U.S. bishops write in their economic pastoral, “we shall have to see a significantly increased level of collaboration and cooperation among the many actors in our society.”

Such partnerships, they suggest, might be in the area of “sharing by workers in the profits of an enterprise” and “enabling employees to become owners of stock in the companies for which they work…”

Lowe’s could have been a model for their proposal.

“Since 1961, every (Lowe’s) employee has been a shareholder,” Robert Strickland explains. “First through a profit sharing trust and now through an employee stock ownership plan, we 7,000 employees own 25 percent of the company.”

He is quick to point out that this is not a stock option or purchase plan, where individuals have the opportunity to buy stock in the company where they work. ESOP (employee stock ownership plan) is “a group stock ownership plan…, individuals do not contribute,” Strickland says.

Under the employee stock ownership plan, stock is held in trust for workers, but workers do not take money from their paychecks to purchase it. Generally speaking, stock is given directly to the employee upon retirement, disability or separation from the company, depending upon the regulations governing individual company ESOPs.

The results of Lowe’s ESOP policies speak for themselves. In the four years following the implementation of employee stock ownership, net profit per employee per year increased 19 percent, up from $1,891 in the fours years before ESOP to $2,245.

In 1982, after-taxes profit on Lowe’s sales of $146,000 per employee was $3,600. Sears, with sales of $75,000 for the same year, showed a $2,100 profit per employee. K-Mart had sales of $70,000 and a per employee profit of $1,100.

“At Lowe’s we view (ESOP) as a motivational and productivity seed bed, from which great things grow,” Robert Strickland says. And, he insists, “When I say employee stock ownership, please focus on the word ‘ownership’ and what that means in human nature.”

Anyone who has kept a cursory watch on the American economy in recent years knows what John Naisbitt refers to in his bestselling “Megatrends” when he says that American productivity is diminishing and America’s share in the global marketplace is on the decline. Some of this is due, writes Naisbitt, to the fact that “the common law that governs employers and employees is still based on the master-servant relationship.” Or in the U.S. bishops’ words, “the sense of being part of the commonweal and of having obligations as well as rights within it has grown weak.”

The adversarial relationship between worker and employer is transformed into a partnership through employee stock ownership. With ESOP, the worker is an owner of the pie, not just its producer.

Robert Strickland shares one of his favorite ESOP stories to illustrate this point. Workers employed in an apple orchard will be given some of the picked apples – the “fruit of their labor, if you will” – if the harvest is good, the weather has cooperated and the owner of the orchard is in a favorable mood.

If the orchard were operated under an employee stock ownership plan, however, the apple pickers wouldn’t have to worry about the weather, how many apples were harvested or whether or not the owner of the orchard was in a positive frame of mind. Under ESOP, workers are assured of the apples because the trees, the land, or a portion of the orchard is theirs.

“The apples that grow on our trees are ours regardless of the mood of the owner,” Strickland enlightens. In terms of what this policy means to a Lowe’s employee in dollar value, he estimates that “we’re looking at about a $500,000 balance in capital over and above wages” for an average worker over 30 years.

A worker’s right to benefit from the total corporate pie is a just approach to employee compensation advises Frank Duffy, of F.J. Duffy and Company, Inc., a financial consulting group in Atlanta.

Historically, workers have shared the profits generated by a company’s product. As the U.S. economy has evolved into an industrial and technological complexity, however, companies increasingly turned back their profits into capital goods – machines, land, buildings, tools, etc.

They have also added to their cash flow (money available for growth) by taking advantage of legitimate tax credits for depreciation of plant.

This emphasis on capital acquisition and accumulation means that “current wage practices are largely based on earlier, outmoded conceptions of work,” Father Duffy asserts, in which concentrated ownership of capital goods remains in the hands of the original owners, without any benefit accruing to the workers.

The bishops address this situation specifically in their pastoral” “The capital at the disposal of management,” they write, “represents to a significant degree the investment of the labor of those who have toiled in the company over the years, including currently employed workers.”

Duffy agrees, indicating that “as the residual owners of labor’s output reap their long-term rewards, the cycle of the rich getting richer and the poor staying poor is sustained.”

The U.S. bishops have called such a cycle a “crisis of citizenship – the loss of a vision of the good of society as a whole.” When this vision is lost, they claim, “groups within our political economy that have particularly strong interests can exercise veto power over policies essential to the protection of human dignity.”

The bishops’ call for economic collaboration in the workplace focuses on the need for a more equitable economic environment, one in which employers and employees would collectively share and shape the economic future of the country.

And, though he has yet to take a close look at the bishops’ economic pastoral, Lowe’s chairman Robert Strickland would seem to agree wholeheartedly that collaboration is a notion whose time has come.

“When one considers four important forces in this country,” he reasons, “employees, management, shareholders and government, it’s getting to be a national tragedy that instead of cooperation and teamwork towards accomplishing shared goals, we have developed adversary relationships that are getting increasingly shrill and acrimonious and non-productive.”

With the bishops, Strickland believes that “improved economic teamwork is essential” and “increased employee stock ownership is one powerful solution.”