profit sharing
Definition
- Noun:
- A system or plan in which a company gives a portion of its net profits to its employees, typically as a bonus or supplement to their regular wages or salaries. The purpose is to incentivize employees and allow them to benefit directly from the company's financial success.
Usage
- As a subject: "Profit sharing was introduced to boost employee morale."
- As an object: "The union negotiated a new profit-sharing plan."
- With prepositions: "Employees participate in the company's profit-sharing scheme." / "The bonus was paid through profit sharing."
Examples
- The new CEO believes that profit sharing aligns the interests of workers with those of the company's shareholders.
- Many tech companies offer generous profit-sharing arrangements to attract top talent.
- Under their profit-sharing agreement, 10% of the annual net profit is distributed among all full-time staff.
Advanced Usage
- "Deferred profit-sharing plan (DPSP)": A type of profit-sharing plan where the company's contributions are invested on behalf of the employee, and the funds are paid out at a later date, often upon retirement.
- He invested his bonus from the deferred profit-sharing plan into his retirement fund.
Variants and Related Words
- Profit-sharing (adjective): Used to describe a plan, system, or agreement.
- They signed a new profit-sharing agreement.
- Gain-sharing: A related system where employees receive bonuses for improvements in productivity, efficiency, or other specific metrics, not solely based on overall company profit.
Synonyms
- Bonus system
- Employee share scheme (in some contexts, though this often involves stock/equity)
Related Phrases
- Performance-related pay: A broader term for compensation tied to individual, team, or company performance, which can include profit sharing.
- Employee incentive plan: A general term for programs designed to motivate employees, which often incorporate profit sharing.
Noun
-
a system in which employees receive a share of the net profits of the business
