Profit sharing is a compensation strategy where employees receive a portion of the company’s profits. This approach can increase employee motivation, align employee and company goals, and foster a culture of ownership.

Profit sharing aligns the interests of employees with those of the company. When employees know that their efforts will directly impact their compensation, they are more motivated to work hard and contribute to the company’s success. This alignment of interests can lead to higher productivity, better teamwork, and a stronger commitment to the organization.

Moreover, profit sharing fosters a culture of ownership, where employees feel that they have a stake in the company’s success. This sense of ownership can lead to higher job satisfaction and lower turnover, as employees are more invested in the long-term success of the company.

There are a number of companies who go as far as employee partnership with a profit-sharing bonus scheme. Each year, the company shares its profits with all partners, with the amount determined by the company’s overall performance. This profit-sharing model has created a highly motivated and engaged workforce, with employees who are committed to the company’s success. Such a profit-sharing model is a key factor in its strong performance and high levels of customer satisfaction.

By aligning the interests of employees with those of the company, businesses can create a more motivated, productive, and committed workforce.

Prompt 31.1: What barriers exist in your organization for such a profit sharing scheme?

Prompt 31.2: Have a look on Google or elsewhere if you can identify such companies, the structures and methods they use and how they handle such a construct practically?