Profit sharing plans


Profit sharing plan is sharing the overall profit of the organization with the employees. The employees will get some percentage as share from the quarterly or annual earnings. This is the best way to make the employees happy and also convenient to work more and more to make the company achieve great success. But, there are some conditions on how and when the employees can withdraw the share amount. Profit sharing system and incentive plan are different, the profit sharing totally depends on the productivity and the income of the organization.

Advantages of profit sharing plan:

There are many advantages and disadvantages to profit sharing plans. Let us learn more about it now.

  1. Increase in productivity:

When the employees get their profit share fund they will be more enthusiastic in their work and the success of the organization. This will help to increase the productivity of the company.

  1. Relationship:

The organization and the employees will get a relationship bond so that it will be very helpful to the development of the company. There will be no boss and the workers among them. Everyone will become equal and so there will be very fewer conflicts between the employees and the management.

  1. Reduction in labor turnover:

The workers will usually do over time job to get more earnings. But, here the workers who do overtime for more profit share will not be included in the profit sharing plan. The employees must at least complete one year in that organization to be eligible for this scheme.

  1. Additional income:

The profit sharing is the additional income for the employees. So that they can improve their standard of living and can lead a healthy and wealthy life than before.

  1. Team spirit:

As every worker is getting the profit share, there will be no boss and no workers. All will be treated as same. So, there will a team spirit among them and all of them will work hard to increase the profit of the company.

  1. Less supervision:

The employees once get their profit share, they will work on continuously and they don’t need any supervisor to monitor them. They know the value of money and they will work for the company as well as for their profit share.

  1. Justice:

The profit will be shared equally by all the employees and the employers. So, there will be no partiality among the employees. This will motivate the employees to work hard.


Thus conclude that profit sharing plan is an excellent plan and it has to get implemented in each and every organization.