State:
Free Special Resources
Get Your FREE Special Report. Download Any One Of These FREE Special Resources, Instantly!
Featured Special Report
Claim Your Free Cost Per Hire Calculator
This handy calculator lets you plug in your expenses for recruiting, benefits, salaries, and more.

Graphs automatically generate to show you your annual cost per hire and a breakdown of where you are spending the most money.

Download Now!
March 23, 2010
Creating Profit Sharing Plans in an Organization for the Purpose of Incentive Pay

In a BLR webinar entitled ‘Incentive Pay: Best Practices for Designing and Managing Pay-for-Performance Plans’, Dan Kleinman discusses the use of profit sharing plans as a type of incentive pay within an organization. As described by Kleinman, in profit sharing plans, employees’ pay is tied to the profits of the organization, so that a portion of the employer’s profits will be shared with them if specific business goals are achieved. An example is provided:

For a Limited Time receive a FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job. Get Your Report Now!
  • a company aims to earn $1 million in extra profits over a given year
  • the company reaches that goal
  • then, the workers will split a share of those additional earnings

Profit sharing plans may be current distribution plans (e.g. immediate cash bonuses), deferred payout plans (e.g. stock or funds invested in a retirement program), or a combination.

Dan Kleinman is the principal of Dan Kleinman Consulting, a California-based compensation and human resource consulting firm. He can be reached at info@dankleinmanconsulting.com.

Featured Free Resource:
Cost Per Hire Calculator
   
   
 
 
Twitter  Facebook  Linked In
Follow Us
CT-WEB02
Copyright © 2016 Business & Legal Resources. All rights reserved. 800-727-5257
This document was published on http://Compensation.BLR.com
Document URL: http://compensation.blr.com/Compensation-news/Compensation/Bonus-Payments/Creating-Profit-Sharing-Plans-in-an-Organization-f/