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 ?
. "Unemployment Persistence Under Profit Sharing." Economics Letters, July 1994, 329-34.
Companies love profit sharing mainly because it is the darling of the top executive level that does not have an effect upon profits.
in Cleveland, Ohio, believes that significant profit sharing percentages and a dedicated workforce make his company competitive.
An important estate planning technique that allows the grantors to maintain total flexibility, thereby allowing them to change the potential beneficiaries and the dispositive provisions of the ILIT is the acquisition of survivorship life insurance in a profit sharing plan.
APPLYING THE JUSTIFICATIONS TO PROFIT SHARING AND ESOPS
In the theory section, Kruse discusses the conditions under which profit sharing is expected to increase company performance.
The employers also believed that profit sharing has an overall positive effect on company performance.
Through the profit sharing plan, Southwest Employees currently own more than four percent of the company's outstanding shares.
Individual 401(k) Plans can provide for increased retirement contributions without many of the complex administrative rules and nondiscrimination testing required of 401(k) plans and profit sharing plans covering multiple employees.
Now that the first quarter is over and our hard-earned profit sharing checks are banked, I have to ask, did anyone sit down with their accountant to see if they made or lost money before profit sharing?
A lump-sum distribution can be made from a profit sharing plan if the employee has attained 59 1/2 even though termination has not occurred; see Letter Rulings 9721036, 8810088 and 8805025.