Advantages of Profit-sharing:
- Extra income to workers:
Workers get extra cash payment due to profit-sharing arrangement. This money is useful for raising their welfare. Workers can purchase costly consumer durables out of this money available at one time. Thus, profit-sharing provides better life and welfare to workers. It creates contended labour force with higher standard of living. Profit-sharing plan acts as a good supplement to regular wages paid to employees. In fact, profit-sharing is aptly described as a form of added remuneration.
- Increase in production and productivity:
Profit-sharing acts as a driving force for more production and productivity. It motivates workers to raise production as they get direct and immediate benefit of additional efforts on their part. The benefits of increase in production are available to employer and employees.
- Fair to employer and employees:
Profit-sharing acts as a driving force for more remuneration to workers along with more profit to employer. Employer pays a part of profit to workers but he is not adversely affected as profit is paid only when it exceeds a papicular limit agreed by both the parties. This arrangement is certainly fair to both parties There is an element of social justice in it.
4. Less supervision required:
Profit-sharing reduces the expenditure on supervision,, ision, of workers as they take interest in the work on their own. Moreover, wastage of,rhaterials, volume of spoiled work, etc, are also reduced.
5. Stability to labour force:
Profit-sharing brings stability to labour force as the benefit of profit-sharing is usually given only to those who work in the company for the whole year. Thus, profit-sharing brings down the rate,, of labour turnover and this gives benefits to the employer/ management.
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