Q&A - What is profit-sharing?

Profit sharing refers to any system whereby employees receive a proportion of business profits.

Profit sharing is generally accepted as having many advantages, providing that all employees are able to participate. Key advantages include:

• Creates a direct link between pay and performance
• Creates a sense of team spirit- helps remove ‘them and us’ barrier between managers and workers if all employees involved
• May improve employee’s loyalty to company
• Employees more likely to accept changes in working practices if can see that profits will increase overall