Common Stocks and Uncommon Profits and Other Writings

 
The Second Dimension 
1 9 5 
mutually beneficial to people, regardless of the color of their skin and 
their origins from countries of quite different economic backgrounds. 
Though the performance-goal plan was first initiated in the United 
States, equally striking results have appeared not just in Texas Instru- 
ments plants in the so-called developed industrial nations such as France 
and Japan but also in Singapore, with its native Asian employees, and in 
Curaçao, where those on the payroll are overwhelmingly black. In all
countries the morale effects appear striking when worker teams not
only report directly to top management levels but also know their
reports will be heeded and their accomplishments recognized and 
acknowledged. 
What all this has meant to investors was spelled out when compa- 
ny president Mark Shepherd, Jr., addressed stockholders at the 1974 
annual meeting. He stated that a people-effectiveness index had been 
established consisting of the net sales billed divided by the total payroll. 
Since semiconductors, the company’s largest product line, are one of the 
very few products in today’s inflationary world that consistently decline 
in unit price and since wages have been rising at the company’s plants 
at rates from 7 percent a year in the United States to 20 percent in Italy 
and Japan, it would be logical to expect, in spite of improvements in 
people-effectiveness, this index to decline. Instead it rose from about
2.25 percent in 1969 to 2.5 percent by the end of 1973. Furthermore,
with definite plans for additional improvement and with further 
increases in profit-sharing funds tied into such improvement, it was 
announced that it was the company’s goal to bring the index up to
3.1 percent by 1980—a goal that, if attained, would make the company
a dramatically profitable place to work. Over the years Texas Instruments 
has frequently publicized some rather ambitious long-range goals and to 
date has rather consistently accomplished them. 
From the investment standpoint, there are some extremely impor-
tant similarities in the three examples of people-oriented programs that 
were chosen to illustrate aspects of the second dimension of a conser- 
vative investment. It is a relatively simple matter to mention and give a
general description of Motorola’s institute for selecting and training 
unusual talent to handle the growing needs of the company. It is an
equally simple affair to mention that Dow found a means to stimulate 
people to work together to master environmental problems and to make 
them profitable for the company, or to state a few facts about the remark-
able people-effectiveness program at Texas Instruments. However, if

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