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 ?
In addition, profit-sharing plans come in different forms.
Life insurance can be purchased with funds in a profit-sharing plan on anyone for whom the participant has an insurable interest.
Later, the profit-sharing plan transferred the insurance contract to Mr.
"Latent Market--There are many business owners with 401(k) profit-sharing plans in place for whom the Qualified Combo Plan will be an attractive strategy.
There is a notable exception, however: employers that maintain a qualified profit-sharing plan that permits elective salary reduction contributions (commonly referred to as 401 (k) contributions) can allow plan participants to designate all or any portion as "Rosh" 401 (k) contributions.
When he revamped the profit-sharing plan, Brubacher also worked with his staff to come up with a shared vision, mission, and set of core values for the company.
Chen says the current profit-sharing plan is offset by lower pay compared with what peer companies offer, and cutting benefits will drive talent elsewhere.
There are several factors a company must consider with a profit-sharing plan. The first is: Who should be included?
The returns achieved by profit-sharing plan portfolios will generally be unrelated or weakly related to company-specific performance as well.
One choice is a profit-sharing plan. Despite its name, your company needn't tabulate its earnings every year and divide that amount among its workers.
Baldor began its profit-sharing plan 51 years ago as a way to share the company's financial success with its employees.