To be effective, an organizational incentive program should include everyone from nonexempt employees to managers and executives. Two common organizational variable pay systems are profit sharing and employee stock plans.
As the name implies, profit sharing is a system to distribute a portion of organizational profits to employees. Typically, the percentage of the profits distributed to employees is established by the end of the year before distribution, although both timing and payment levels might be determined later.
When implementing a profit sharing plan, companies should pay special attention to how it is explained to employees and how open leaders are about the organization’s financial performance….(read more)
LEARN MORE ABOUT: Profit Sharing Plans
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