A Tribute to PSCA and the Individuals Who Made It Successful

Written in celebration of PSCA’s 60th Anniversary and 60th Annual National Conference

The Profit Sharing/401k Council of America (PSCA) has roots deep in American history. The beginning of profit sharing in the United States can be traced to Albert Gallatin, Secretary of the U.S. Treasury, under Presidents Jefferson and Madison. In 1797, Gallatin instituted the first profit sharing plan for the employees of his New Geneva, Pennsylvania, Glass Works. The plan provided that, in addition to regular wages, employees would receive one half of the “neat” profits of his business. Gallatin stated that he undertook the plan so that, “the democratic principle upon which our nation was founded should not be restricted to the political process, but should be applied to the industrial operation as well.” Tax advantages for profit sharing plans were first granted by the Federal Government in 1922 when companies were permitted to take a deduction for company contributions to defined contribution plans. But employees were not taxed on those contributions and the earnings thereon until they took constructive receipt of the money. 

The oldest known continuous plan in the United States is that of the Procter and Gamble company (1887). Other profit sharing pioneers include Eastman Kodak (1912), Sears Roebuck & Company (1916), Harris Trust and Saving Bank (1916), S.C. Johnson & Son (1917), and Joslyn Manufacturing and Supply Co. (1918). 

Mission Statement and Evolution of PSCA
Today, PSCA is a broadly-based association of diverse businesses that believe profit sharing, 401(k), and related savings and incentive programs strengthen the free-enterprise system, empower and motivate the workforce, improve domestic and international competitiveness, and provide a vital source of retirement income. However, this current mission has evolved over the years. The organization’s renaming throughout history is a sign of these changes. 

Originally, PSCA was called the Council of Profit Sharing Industries. The emphasis of the organization was on the act of profit sharing itself, and it was principally an organization of manufacturers and industries. Later, the organization became broader in composition, including member companies not termed “industries.” To reflect this movement, the name was changed to the Profit Sharing Council of America in 1973. Then, in 1995, in recognition that the term 401(k) had become the pre-eminent pubic description of private-employer defined contribution plans, 401(k) was added to the organization’s title. Initially, with the introduction of 401(k), it was concluded that there was no need to reference 401(k) in the title because, in the tax code, 401(k)s are a subset of profit sharing plans. There has been an evolution in PSCA’s primary focus from the sharing of profits to employer-facilitated retirement saving. However, commitment to partnership in the workplace remains fundamental to the organization.
PSCA History
PSCA traces its roots to 1946 and Orrville, Ohio. Speaking at a Rotary Club meeting, Dr. Robert Hartman, a 36-year-old professor of philosophy from nearby Wooster College, spoke about the evils of Nazism and Fascism. 

After the meeting, Hiram C. Nicholas, president of Quality Castings Company, approached Dr. Hartman. “I have the answer professor. I’m a profit sharing manufacturer. Since we began giving 50 percent of our profits to our workers, our company profits are larger than ever, and our prices are a third lower than our competitors. 85Why can’t we organize so our idea can gather strength?” 

Nicholas is considered the father of what is now known as PSCA. A portion of his interview with Gray Iron News for their January 1953 publication included these words, “85 I sincerely believe that profit sharing is a means for developing good human relations in industry for the benefit of the employee, the employer, the consumer, and our economy in general.” Today, Quality Castings Co. remains a member of PSCA, and his grandson, Robert A. Nicholas, proudly serves as a member of PSCA’s Board of Directors. 

To test support for an organization of profit sharing industries, Nicholas asked Hartman to write letters or call on other businessmen, such as James F. Lincoln, president of Lincoln Electric Company, Cleveland, Ohio. 

Lincoln, also a strong advocate of profit sharing, paid a cash bonus to his employees each year based on the profits of the company, and in the previous year had written a book, Incentive Management. He told Hartman that rewarding workers was not a giveaway but, “intelligent selfishness.” Since 1934, his company had improved the quality of its products while offering them at a lower price than his competitors. Letters to H. F. Johnson, president of S.C. Johnson & Son, Racine, Wisconsin, and Horace Hull, president of Hull-Dobbs Company, a Ford dealership in Memphis, Tennessee, met with similar responses. 

The first organizational meeting of the group took place on Friday, June 13, 1947 at the Hotel Carter in downtown Cleveland. Initially planned for 10 participants, the meeting swelled to more than 50 in attendance with full Associated Press coverage. Members of the organizing committee included Hartman, Nicholas, Lincoln, Johnson, John D. Gordon, Progressive Welder Company, Colonel Cass S. Hough, Daisy Manufacturing Company (makers of air rifles), and Walter H. Wheeler Jr., Pitney Bowes. 

On Friday, October 17, 1947 the first meeting of the Council, held at the Hotel Carter in Cleveland, attracted nearly 200 men representing interested firms and companies throughout the nation. The agenda included launching the Council as a bonafide organization, voting on the constitution, the establishment of membership dues, and the election of officers and trustees. Elected officers included: James F. Lincoln, President; Dr. Robert S. Hartman, Executive Secretary; John D. Gordon, Secretary; H. C. Nicholas, Vice Chairman; and E. S. Patterson, treasurer. On October 18, 1947, The Wall Street Journal reported that the purpose of the new Council of Profit Sharing Industries was, “To strengthen free enterprise by extending profit sharing in industry, spread prosperity through higher buying power and lower prices, and attain industrial peace by applying ethical principles to human relations in industry.” 

Just a year later, on November 8 and 9, 1948, 500 people attended PSCA’s Annual Conference at the Hotel LaSalle in Chicago. At that time, membership had grown substantially and included many familiar names such as Anderson Corporation; Connecticut General Life Insurance; David C. Cook Publishing Co.; Graybar Electric; McDermott, Will & Emory; Saint Louis University; Signode Corporation (now a part of Illinois Tool Works); McCormick & Company; and Procter & Gamble. 

The June 1949 trustees meeting held at the Peabody Hotel in Memphis, Tennessee, and hosted by Horace Hull, proved to be another memorable event. According to an early PSCA News Letter, “Mr. Hull’s efforts to make the meeting a success and to secure maximum comfort and enjoyment for the members were tireless. He was so eminently successful that the Trustees acclaimed him with a rising vote of thanks.” Mr. Hull, in response, requested permission to say a few words, which are produced as follows: 

“Gentlemen, you owe me nothing — instead, to be associated with such a fine group of men who are devoting their time, money and effort for the common good of the people of this nation is one of the greatest honors I have ever enjoyed. 

“These two days have been the most productive, to my way of thinking, on how the Council can be a great force toward the establishment of an economy of earned security. 

“At the age of twelve I was forced upon my own and secured a position which paid me $1 per week. (I may add that I did work at this age, and for the above money, of no mean importance and of equal type of work that I am paying as much as $150 a month for in my business today.) I, however, succeeded in working my way through school and college and have been able to attain a measure of success that would not be possible anywhere else but in this country of ours. I would walk out of this meeting stripped of every penny I have and begin my life over at my age (65) without a cent — or I would even give my life — if by such act I could insure to my children and grandchildren, and other young people of this country, the same personal liberties and freedom of opportunity and enterprise which I have enjoyed. It is because the Council seeks to continue this rich heritage and enlarge it that it has my unqualified interest and support.” 

The News Letter went on to report, “There was not a member present who will quickly forget the fervor and force of his words.”

Hiram Nicholas Award
Years later, and as a tribute to the founder of PSCA, the Hiram C. Nicholas Gold Medal was created. It has been presented to:

James F. Lincoln, President, Lincoln Electric Co., Cleveland Ohio, 1956
General Robert E. Woods, Sears Roebuck & Co., Chicago IL, 1959
Herbert F. Johnson, Chairman, S.C. Johnson & Son Inc., Racine, WI, 1960
John W. Leslie, Chairman, Signode Steel strapping Co., Chicago, IL, 1960
Walter H. Wheeler Jr., President, Pitney-Bowes Inc., Stamford CT, 1961
Samuel C. Johnson, Chairman, S.C. Johnson & Son, Inc., Racine, WI, 1989

On the 25th Anniversary of PSCA, Richard O. Lang, S.C. Johnson & Sons, Inc. wrote, “In the early years it took men of determination and zeal to keep the Council alive and to preserve its goals. These dozen or more men were truly dedicated to profit sharing. The acceptance today of the Council among profit sharers and in Washington is a tribute to the persuasiveness and dedication of the founders.”

Staff Leadership
PSCA’s staff leadership has been notably stable. This short list in itself is a testimony to the remarkable commitment these individuals have had for PSCA, and its mission. It should be noted that Rear Admiral A.C. Burrows became PSCA’s first president on August 1, 1958. Prior to Burrows, Joseph B. Meier was the highest-ranking staff member as Administrative Vice President and Secretary. PSCA’s staff leadership includes: 

Joseph B. Meier	1948 – 1958
Rear Admiral A.C. Burrows	1958 – 1962
Stanley D. Noble	1962 – 1973
Lawrence O’Connor	1973 – 1980
Walter Holan	1980 – 1987
David L. Wray	1987 – present

Legislative Activities
From its very beginnings, PSCA has been involved in the legislative process. Early photographs show members of PSCA meeting with legislators in Washington DC. Copies of letters to President Franklin D. Roosevelt and members of Congress are in the Council archives. References of meetings with Senators, Representatives, and congressional staff members abound. Meetings with the Department of Labor and the Internal Revenue Service are referenced throughout PSCA files. And on January 1, 1990, PSCA opened its Washington DC office. 

While difficult to enumerate all the legislative successes of PSCA, the following examples serve to “highlight” some of the more significant changes attributed to the efforts of PSCA:  

1954: Successfully opposed an effort to force defined contribution plan payouts to be in the form of an annuity.

1978: Facilitated the passage of 401(k) as a very narrow fix of ERISA for profit sharing distributions in cash and deferred profit sharing plans. (Note: This is a great example of the unintended consequences possible when passing federal legislation. The language in the final bill permitted an interpretation of the deferral to include W-2 earnings, paving the way for the creation of 401(k) Plans.)

1996: Facilitated the passage of legislation prohibiting states from taxing distributions from tax-qualified retirement plans paid to former residents. (Note: This legislation also applied to non-qualified plan income paid over a ten-year period.) Without passage, source-state taxation states could have forced former residents to pay taxes (at the time of withdrawal) to each state of residency during their working career, based on the contributions and earnings attributable to each state.

Facilitated passage of the retirement plan provisions of EGTRRA in 2001 and the passage of their permanency in the Pension Protection Act of 2006 (PPA).

Members — PSCA’s Lifeblood
PSCA is its members. While this historical outline only mentions a few individuals and companies who contributed to the strength, growth, integrity, and status of PSCA, it cannot begin to recognize the extraordinary commitment of thousands of others who have made significant contributions. From the initial meetings of PSCA in 1947 to the dedicated volunteers and members in 2007, the strength of PSCA has always been people committed to partnership in the workplace. 

It is to our volunteers and volunteer leaders — past and present — that we wish to express our profound gratitude and thanks for making PSCA so successful. For example, at this year’s Signature Awards, more than 40 highly-qualified defined contribution experts donated their time to make this year’s judging the best ever. Without volunteers committed to PSCA and its mission, we could not have achieved the success and recognition we enjoy today. These include members of the Board of Directors, committee members (some of whom have served for years), individuals who volunteer for specific tasks and those that have been willing to help whenever help was needed. As stated by David Wray, PSCA president, “It is the incredible contribution of enormous amounts of time from expert volunteers that have made our organization such a great success.”

Member Benefits
To best fit the needs of today’s defined contribution reality, PSCA has designed a significant menu of benefits to inform, educate, and support PSCA members. PSCA’s services are tailored to meet the needs of both large and small firms. They include: 

Washington Representation and Media Outreach 

Washington Representation
PSCA is present full-time in Washing ton representing the views of members to federal policymakers. PSCA’s annual Washington Fly-In provides members with an opportunity to get the latest updates on legislative and regulatory matters from those making the decisions and the opportunity to meet with decision-makers personally. PSCA’s Washington staff is available by telephone and e-mail to answer any Washington-related questions members have. 

PSCA’s Executive Report
Members are provided a monthly newsletter providing concise, current information on Washington’s most recent events and developments. 

Media Outreach
PSCA representatives aggressively reach out to members of the media to actively promote the spread of complete, accurate, and balanced information about employer-sponsored defined contribution plans. PSCA issues press releases to generate media coverage of important defined contribution-related events and inform the media of PSCA policy positions.

Research and Benchmarking 

PSCA Surveys
PSCA conducts the industry’s most comprehensive annual survey of defined contribution plan practices as well as other more concise studies on topics of interest to members. Members who complete the survey receive a comprehensive report benchmarking their plan against overall industry practices.

Conferences and Professional Development 

Conferences and Training
PSCA conducts a national conference and regional conferences designed for plan administrators and sponsors. These events provide education from industry leaders and opportunities for peer networking. 

Web Casts
PSCA provides comprehensive unbiased training for employees of its members. This state-of-the art training, available 24-7 covers plan basics, design, administration, fiduciary responsibilities, investments and participant communication.

Participant Education and Communication 

Bimonthly Magazine, Defined Contribution Insights
Winner of a 2007 Gold Circle Award from the American Society of Associa tion Executives and the Center for Association Leadership, this bimonthly membership newsletter is an essential 401(k) and profit sharing resource featuring new ideas, trends, and practices and provides practical and constructive solutions for current industry concerns. 

Members-Only Web Page
PSCA hosts www.psca.org, an interactive community of plan sponsors, administrators, and service providers sharing administrative best practices, legislative updates, and technical assistance for 401(k) and profit sharing plans. 

Signature Awards
PSCA recognizes outstanding employee communication and education programs implemented by plan sponsors, administrators, and service providers through its Signature Awards program, launched in 1996. 

Professional Growth
PSCA provides opportunities for plan sponsors, administrators, and service providers to serve on PSCA committees, speak at regional and national conferences, and write articles published in Defined Contribution Insights. 

Members Only Toll-free Help Line
PSCA answers member questions and provides solutions and ideas for plan sponsors and administrators. 

401(k) Day
PSCA hosts an annual event promoting plan participation, communication, and education. PSCA provides members with new 401(k) Day tools and ideas each year. This year’s theme is “Make Every Day 401(k) Day.” 

A dedicated staff of professionals, who recognize the value of the employer in sponsoring and administering defined contribution plans, works closely with the Board of Directors, various committees, and member volunteers to ensure delivery of these “world class” services.

Publications 
Since its inception, PSCA has offered numerous publications to member companies and the public. Early publications included a profit sharing manual, published in 1948 and distributed nationally and internationally; the first annual profit sharing survey, published in 1957 and now in its fiftieth year; a study titled, “The Financial Significance of Profit-Sharing,” published in 1969; and a prototype plan distributed by request to any interested party in 1970. PSCA’s current bimonthly membership newsletter, Defined Contribution Insights, began in 1948 as News Letter. This publication soon evolved into Profit Sharing as early as 1950. Profit Sharing became Defined Contribution Insights in January 2005. In the 1960s, PSCA also began distributing profit sharing filmstrips, and later videos, to member companies as a way to communicate with employees. PSCA also developed a series of payroll stuffers and posters for member companies to distribute to their employees. Other publications available to the public include:

Take Control: How to Save now for Retirement — an eight page pamphlet that introduces basic concepts behind retirement planning

PSCA’s Profit Sharing and 401(k) Plan Cost Disclosure Worksheet — available via download

PSCA’s Annual Retirement Checkup — available via download

Take Control with Your 401(k), An Employee’s Guide to Maximizing Your Investments — a comprehensive guide for employees providing practical guidance on how to maximize the benefits of 401(k) participation; available online at psca.org.

A complete Profit Sharing/401(k) Kit

Numerous surveys listed on PSCA’s research page at www.psca.org

Profit Sharing Research Foundation (PSRF)
The Profit Sharing Research Foundation was organized in 1951 to give the profit sharing community an organization to address unusual research or education projects. It was an outgrowth of PSCA’s planning and research committee. PSRF works closely with other organizations, associations, and universities in furthering research and promoting education. Bert L. Metzger, a prolific writer, researcher, and dynamic speaker, served as the original Foundation president and secretary. For decades, he was a featured speaker at PSCA conferences. PSRF was reconstituted as the Profit Sharing/401(k) Education Foundation in 1995 and continues to be available for research and education projects.

Today’s PSCA
Today, PSCA is a highly-respected national non-profit association of 1,200 companies and their nearly six million plan participants. PSCA represents its members’ interests to federal policymakers and offers practical, cost-effective assistance with profit sharing and 401(k) plan design, administration, investments, compliance, and communication. PSCA’s services are tailored to meet the needs of both large and small companies. PSCA members believe that profit sharing and 401(k) plans fit today’s reality and that employers make an invaluable contribution when they sponsor profit sharing and 401(k) plans. Specifically, members believe that profit sharing and 401(k) plans are good for employees, good for companies, and good for America.

Allan Te Ronde is a former Chairperson of PSCA’s Board of Directors, 1998-2000