Question

in 4 paragraphs explain Profit Sharing in the US between Management and Workers

Answer 1

Profit sharing are numerous incentive plans introduced by businesses in United States that provide direct or indirect payments to it's employees that depend on the profitability of business in addition to regular salary and bonuses to the employees. The profit sharing bonus payments to non-management employees specifically takes place at the discretion of the business and does not constitute an entitlement. Business may use any number of different formulas for the computation the distribution of profits to their employees and several variety of rules and regulations regarding eligibility.

In United States few profit-sharing systems were established for precisely the purpose of development of relationship between the management and workers. It is an approach for bringing employees closer to management, thus boosting production and efficiency, building up employee loyalty and avoiding union interference and industrial unrest. A profit sharing plan can be set up in United States where all or few of the employee's profit sharing amount can be contributed to a retirement plan. These are generally used in conjunction with 401(k) plans.

The advantage of profit sharing is that it spreads the message that all of the employees are working together on the same team. Also the employees have the same targets and are provided rewards equivalently to reinforce the shared service to customers and lack of competition among each other.

The disadvantage of the profit sharing plans is that employees individually cannot see and know the impact of their own actions and work on the company's profitability. Moreover after a while employees enjoy receiving their profit sharing money, it often becomes more of an entitlement instead of a motivational factor.