Jenny A.

Denaga
MKTMGT-1106

To compete more effectively, your organization is considering a profit-sharing plan

to increase employee effort and to encourage employees to think like owners. What are the
potential advantages and disadvantages of such a plan? Would the profit-sharing plan have
the same impact on all types of employees? Is the size of your organization an important
consideration? Why? What alternative pay programs should be considered?
Denaga's group of company is considering a profit-sharing plan to increase employee
effort and to encourage employees to think like owners. The meeting about the plan gives
employees and DGC owner different perspective. Of course, employees are very excited
about this plan because except having their fixed salary, they will earn additional income
when the employer implement this plan, on the other hand, the employer also thought that
this plan is very helpful not only to the employees but also to the company itself, because the
more that the employees are eager and motivated to do their best, the more chance of
company to be successful.
However, profit sharing can also have a negative effect to the employees especially if
the profit is not equally shared, example the manager or the employees who have higher
positions will receive 15% profit share while the normal or regular employees will just
receive a 5% profit share. There are some instances that the regular employees will be less
motivated because even they put effort to that specific project, the profit they will receive
are less compared to the managers. Moreover, when the normal or regular employee are
very competitive that time comes that their actions become unjust just to receive that certain
profit share, s/he will not only the one who will be put on trouble because their actions will
reflect to the company.
Furthermore, size of the organization is one of the things that the company will first
look through before implementing the said plan. Example, when the company is small and
just starting, this plan will not work and if the company is big and already stable, profit-
sharing plan can be very effective because the company already know the abilities of their
employees, so, there is a chance that the employer will have a good decision for how many
profits will be given to their employees.
On the other hand, if the profit-sharing plan will not be implemented, the possible
alternative pay programs that DGC can implement are children's educational plan for the
employee who have kids and discounts to the product and service that the company offers.

Note: DGC means Denaga’s Group of Company