profit sharing

(redirected from Profit sharing plan)
Also found in: Dictionary, Thesaurus, Medical, Financial, Acronyms, Wikipedia.
Related to Profit sharing plan: Deferred Profit Sharing Plan

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.
..... Click the link for more information.
 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 ?
Through the profit sharing plan, Southwest Employees currently own more than four percent of the company's outstanding shares.
Our profit sharing plan is an outstanding way for Baldor employees to accumulate money for retirement.
For 2007, there were 5,439 eligible employees in Baldor's profit sharing plan and the average contribution was 3.
The new profit sharing plan would give employees 10% if profit margins are between 0-5% and 25% for margins exceeding 5%, reports Reuters.