MERITS OF PROFIT SHARING
Profit Sharing Scheme is becoming more and more popular these days. Many industrial units have adopted this scheme. Important advantages of this scheme are as follows :
(1) Motivation for More Work:
This scheme motivates the workers to do more and more work and to dedicate their efforts to the growth of the enterprise because they know that the prosperity of the enterprise is the prosperity of themselves.
(2) The Fruits of this Scheme are more than the burden:
The fruits of the scheme of Profit Sharing are more important and encouraging than the burden imped by it upon the management because the workers dedicate their efforts to the growth of an enterprise.
(3) Close relations between employers and employees:
A great advantage of this scheme is that it brings the employees close to their employer. They feel that they are the partners in their enterprise. It develops a feeling of responsibility among them.
(4) Industrial peace:
Profit Sharing Scheme solves many industrial problems such as strikes, lock-outs etc. It establishes the peace in the industrial world.
(5) Improvement in the quality and quantity of production:
The Profit Sharing Scheme helps in the improvement of both the quality and quantity of production in the enterprise. The workers try to work to best of their eificiency. They also try to maintain best quality of production.
(6) Economy:
The Profit Sharing Scheme is helpful in bringing economy and also in the functions of the enterprise. The workers handle raw materials and machines in a manner that the wastages are reduced to a minimum and thus the cost of production is reduced substantially.
(7) Minimum cost of production:
As a result of the Profit Sharing Scheme, management is successful in reducing the wastages to the minimum. Maximum internal economics is achieved. As a result of all these factors, the cost of production comes to the minimum.
(8) Increase in the efficiency of workers:
This scheme is helpful in increasing efficiency of the workers also. They work to the best of their efficiency and gradually it becomes a part of their habit.
(9) Higher earnings of workers:
Workers get more remuneration under this scheme as they get a certain share in the profits of the enterprise in addition to their regular wages and salaries.
(10) Higher standard of living of the workers:
Due to the increase in their income, the workers enjoy a higher standard of living. They can provide better facilities to their family.
(11) Minimum need of supervision:
The Profit Sharing Scheme minimises the need of supervision also because the workers themselves work efficiently and economically on their own.
(12) Helpful in establishing social justice:
The Profit Sharing Scheme is in accordance with the principle of social justice. The profit is shared with those who actually deserve it because the profit is the result of active cooperation and participation of the workers.
(13) Development of the sense of responsibility among workers:
Another important advantage of the profit-sharing scheme is that it develops a sense of responsibility among the workers They are self-motivated and feel their responsibility in the concern.
(14) Advantages to society:
The advantages of Profit Sharing Scheme for society are-
(i) Availability of goods and services of the best quality at the minimum price,
(ii) Increase in Industrial production and productivity,
(iii) Increase in Employment opportunities,
(iv) This scheme encourages industrial research.
(15) Advantages to the Nation:
The following points indicate that this scheme is an advantage to the nation also-
(i) scheme increases national production and productivity,
(ii) brings industrial peace,
(iii) helpful in the development of industrial production and productivity,
(iv) helps in equitable distribution of national income.
