M52 - Personnel Economics: Compensation and Compensation Methods and Their EffectsReturn

This article deals with profit-sharing, i.e. one of the possible types of group-based rewards for performance. In the introduction is defined profit-sharing and put into the wider context of rewards for performance. Because there are numerous types of profit-sharing plans, the key features, which distinguish these various types, are identified. On the basis of an extensive literature review are characterized the main effects of profit-sharing and mechanisms of their impact. It is pointed out that the decision on the adoption of "profit-sharing" and the implications of its implementation depend on several key factors. These factors are identified and discussed in this article. We also identify potential weaknesses of profit-sharing and possible methods for their elimination or mitigation are suggested. In the final part of the article is provided summary of findings and suggestions for further research.