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 ?
UN) and are eligible for registered retirement savings plans (RRSP's), registered retirement income funds (RRIF's) and deferred profit sharing plans (DPSP's).
DES MOINES, Iowa -- The Principal Financial Group(R), the nation's 401(k) leader and a total retirement solutions innovator, today announced it was selected to provide custodian and recordkeeping services for the deferred profit sharing plans (DPSP) of the Magna International Inc.
Developed by Bank of the West subsidiary Eureka Investment Advisors, the Eureka Advantage Plus Individual (k) plan enables small business owners to take advantage of significantly greater tax-sheltered contributions than other traditional options such as SEP and SIMPLE IRA plans, profit sharing plans and Keoghs.