Profit sharing. Many employers share part of their profits with their employees. They do this to encourage productive work and to induce the employees to remain with the company.
Profit-sharing plans are usually based on the net profit of the firm, after all interest, taxes, and other charges against the gross profits have been paid. A certain percentage of the profit is set aside for the employees, and workers share in it according to their salary or their length of service with the company.
Some industrialists object to profit-sharing plans, because workers do not share the responsibilities and risks of the business. Some labor leaders also oppose such plans, believing that workers should concentrate their efforts on obtaining higher wages. But other industrialists and labor leaders believe that properly administered profit-sharing plans promote better understanding between employer and employees, and stimulate efficiency, since both employer and employees share in any gains achieved by joint effort.
