Question

In: Economics

Explain how to motivate managers with profit-sharing based on practical examples?

Explain how to motivate managers with profit-sharing based on practical examples?

Solutions

Expert Solution

A profit-sharing system can act as an employee and management motivator. The scheme is usually set up to give the workers qualifying for the incentive a small percentage of company earnings once a year. To maximize the motivational impact of this annual incentive scheme, the terms and conditions of the profit-sharing arrangements should be set. The IRS requires companies to invest profit-sharing assets into tax deductible accounts such as the 401k business. Higher productivity means more funds available to go into the retirement of the workers. It will be included, along with the contributions of the workers and the corresponding percentage of the organization.

According to the "Inc." website workers are inspired to be associated with a profitable business. The company's willingness to offer incentives for income sharing means workers are helping to create a profitable organisation. To raise the motivational feeling of pride, the organization should give media press releases announcing the progress of profit-sharing and create a ceremony for workers to reveal profit-sharing outcomes.

The main reason for having a profit-sharing system is to receive a cash incentive for workers. If this incentive is deferred in a savings account or paid in a lump sum, much of the benefit in a profit-sharing system comes from having the money. If the organization has an increasing amount of profit sharing that workers can control, it helps inspire the employees to work harder and increase the percentage.


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