Profit sharing is the most popular method rewarding the employees. Under profit sharing incentive plan, the employees are paid in addition to the regular wage, a particular share of the net profits of the business as incentive. Characteristics of Profit Sharing Incentive Plans The key features of profit sharing incentive plans may be stated as follows: It is based on an agreement between the employer and the employees. It is a payment made after ascertaining the net profits of the business. It is not therefore, a charge on profits. The amount paid to the employees is over and above their normal pay. The amount to the paid is determined based on some agreed formulas. The payments based on seniority and wage level of individual workers. Merits of Profit Sharing The advantages of profit sharing incentive plans are as follows: Better employer-employee relations – This is possible, as the employer is Continue reading