What is the primary difference between profit-sharing and gain-sharing plans?
A) Profit-sharing plans provide one-time payments based on performance accomplishments, whereas gain-sharing plans provide weekly and/or monthly payments.
B) Profit-sharing plans pay increases in proportion to performance contributions, whereas gain-sharing plans pay in proportion to seniority and experience.
C) Profit-sharing plans are most common at the executive level, whereas gain-sharing plans are most common at the lower levels.
D) Profit-sharing plans are monetary forms of compensation, whereas gain-sharing plans are nonmonetary.
E) Profit-sharing plans distribute to employees a proportion of net profits earned by the organization, whereas gain-sharing plans allow employees to share gains realized by their efforts.

Question

Quizplus · Accepted Answer

The primary difference between profit-sharing and gain-sharing plans is that profit sharing distributes a proportion of net profits earned by the organization to employees, whereas gain-sharing allows employees to share gains realized by their efforts. Profit-sharing plans may pay out annually or one-time payments, whereas gain-sharing plans may provide weekly or monthly payouts based on performance. The rewards in gain-sharing plans are dependent on the productivity of the whole team, whereas profit-sharing plans may pay out based on company profitability.

What Is the Primary Difference Between Profit-Sharing and Gain-Sharing Plans