What is a limitation of profit sharing plans?
A) profit sharing plans are excessively costly
B) employees have a difficult time understanding their particular contributions to company profits
C) profit sharing adds recurring increases to base pay year over year
D) profit sharing plans create unhealthy competition between employees

Question

Quizplus · Accepted Answer

B)A basic problem with a profit-sharing plan stems from the recipients' seldom knowing precisely how they helped generate the profits,beyond just doing their jobs.HR professionals refer to this as a line-of-sight problem.And,if employees continue to receive a payment,they will come to expect it and depend on it.If they do not know what they have done to deserve it,they may view it as an entitlement program and the intended ownership attitude may not materialize.

What Is a Limitation of Profit Sharing Plans