profit sharing

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profit sharing,

arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of equipment, and the like. Profit sharing does not imply participation by the workers in management. The employer determines the rate at which profits are shared; since the rate is fixed beforehand, profit sharing differs from the bonusbonus,
extra amount in money, bonds, or goods over what is normally due. The term is applied especially to payments to employees either for production in excess of the normal (wage incentive) or as a share of surplus profits.
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 system. Profit sharing plans have been in operation in France since 1842 but have not been widely adopted in the United States. The plan has been most successful in businesses where employees work without direct supervision or where it is limited to supervisory employees or lesser executives, e.g., branch managers and department managers in department stores.

profit sharing

[′präf·ət ‚sher·iŋ]
(industrial engineering)
Sharing of company profits with the employees.
References in periodicals archive ?
On the other hand, this presents greater opportunity for returns through gainsharing than most other areas of your operation.
Perhaps the most comprehensive protection offered by the Stark law as it relates to gainsharing is the exception for bona fide employment relationships.
The Medicare Modernization Act of 2008 gave CMS the authority to conduct limited gainsharing demonstrations under Section 646.
Other unionized companies find employees are open to substituting the bonuses they earn from an ongoing gainsharing plan for all or part of the guaranteed increases the union asks for in negotiations.
Some companies, on the other hand, drag their heels on Gainsharing mainly because they are satisfied with their current, mediocre performance.
In the long run, gainsharing approaches that can save money without impacting patient care are likely take hold, he said, but first hospitals need clarification from Congress, the Health and Human Services secretary, and the Office of Inspector General about what arrangements are allowed.
Gainsharing shares expense savings based on an improvement in the ratio of expenses to volume compared to the previous year.
Gainsharing helped TNC focus on quality principles.
Gainsharing and Power: Lessons from Six Scanlon Plans.
businesses to adopt gainsharing as a means of productivity, yet its usage is far from universal (Markham et al.