The effectiveness of profit-sharing plans may be diminished because:
A)potential free-rider problems render such plans ineffective in all but the largest firms
B)profit-sharing is a type of deferred payment scheme
C)the plans are tied to group performance,so the link between profit-sharing and worker productivity is not always clear-cut
D)there is no means by which greater work effort can be translated into greater compensation for a worker

Question

Quizplus · Accepted Answer

Profit-sharing plans are tied to group performance, which means that the link between profit-sharing and worker productivity is not always clear-cut. This can lead to reduced effectiveness as workers may not see a direct correlation between their individual efforts and the rewards they receive through the profit-sharing plan.

The Effectiveness of Profit-Sharing Plans May Be Diminished Because