profit sharing: meaning, definition, pronunciation and examples
C1Formal; Business & Finance
Quick answer
What does “profit sharing” mean?
A system in which a company shares a portion of its profits directly with its employees.
Audio
Pronunciation
Definition
Meaning and Definition
A system in which a company shares a portion of its profits directly with its employees.
Any arrangement where profits are distributed among multiple participants, such as in partnerships, joint ventures, or cooperative businesses.
Dialectal Variation
British vs American Usage
Differences
No significant semantic difference. UK usage may historically refer to specific schemes under industrial democracy policies. US usage is strongly associated with corporate benefit plans (ESOPs, 401(k)s).
Connotations
UK: Employee participation, industrial relations. US: Employee benefit, corporate incentive, retirement planning.
Frequency
Slightly more frequent in American English, given the prevalence of defined contribution retirement plans linked to profits.
Grammar
How to Use “profit sharing” in a Sentence
[Company] operates a profit-sharing scheme.[Employees] are covered by profit sharing.The union negotiated profit sharing.Vocabulary
Collocations
Examples
Examples of “profit sharing” in a Sentence
verb
British English
- The firm does not currently profit-share with its staff.
American English
- The company plans to profit-share with all full-time employees.
adjective
British English
- They signed a new profit-sharing agreement with the union.
American English
- She enrolled in the corporate profit-sharing plan.
Usage
Meaning in Context
Business
The new profit-sharing plan aims to boost employee retention.
Academic
The study analyses the impact of profit-sharing on productivity in manufacturing sectors.
Everyday
My end-of-year bonus comes from the company's profit sharing.
Technical
The deferred profit-sharing plan (DPSP) is registered with the revenue agency.
Vocabulary
Synonyms of “profit sharing”
Strong
Neutral
Weak
Vocabulary
Antonyms of “profit sharing”
Watch out
Common Mistakes When Using “profit sharing”
- Using as a verb (e.g., 'The company profit-shares' is non-standard).
- Confusing with 'stock options' or 'equity sharing'.
- Omitting the hyphen when used as a compound modifier (e.g., 'a profit-sharing agreement' is correct).
FAQ
Frequently Asked Questions
No, not necessarily. Profit sharing typically involves cash payments or credits to a retirement account based on profits. It does not automatically grant ownership shares (stock) in the company, though some plans may be linked to stock purchases.
Eligibility is defined by the specific plan. It often requires a minimum period of employment (e.g., one year) and full-time status. Some plans include all employees, while others may exclude certain groups like part-time workers or senior executives.
It is generally a supplement to, not a replacement for, a base salary. Because profits can fluctuate, it is considered variable compensation. A 'discretionary bonus' might be similar but is not always formally tied to declared profits.
They are closely related. 'Profit sharing' distributes a share of overall company or divisional profits. 'Gain sharing' more specifically rewards employees for improvements in productivity, cost-saving, or other measurable performance gains, which may occur even if the company isn't overall profitable.
A system in which a company shares a portion of its profits directly with its employees.
Profit sharing is usually formal; business & finance in register.
Profit sharing: in British English it is pronounced /ˈprɒf.ɪt ˌʃeə.rɪŋ/, and in American English it is pronounced /ˈprɑː.fɪt ˌʃer.ɪŋ/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “To have a share of the pie (related concept)”
Learning
Memory Aids
Mnemonic
Imagine a large pie (profit) being shared (sharing) equally among the chefs (employees) who helped bake it.
Conceptual Metaphor
BUSINESS IS A JOINT VENTURE (where success is shared).
Practice
Quiz
What is the primary purpose of a profit-sharing plan?