Payment to employees based on a share of the profits of the business?

Payment to employees based on a share of the profits of the business?

• A. Profit Sharing
• B. Share Ownership Scheme
• C. Bonus
• D. Commission

Answer: (A)

This item tests how firms reward staff for the profits they help generate. Profit sharing means employees receive a portion of the company’s profits, so their pay rises when the business does well. It directly links reward to overall profitability and encourages everyone to work toward higher profits. A bonus is usually a one-off extra payment tied to targets or performance, not a standing share of profits from the whole business. A share ownership scheme involves employees owning shares in the company, so gains come from share value and dividends rather than a direct profit-based payout. Commission is typically paid based on individual or team sales, not the company’s profits as a whole. So profit sharing is the best fit because it ties employees’ pay directly to the business’s profits.

This item tests how firms reward staff for the profits they help generate. Profit sharing means employees receive a portion of the company’s profits, so their pay rises when the business does well. It directly links reward to overall profitability and encourages everyone to work toward higher profits.

A bonus is usually a one-off extra payment tied to targets or performance, not a standing share of profits from the whole business. A share ownership scheme involves employees owning shares in the company, so gains come from share value and dividends rather than a direct profit-based payout. Commission is typically paid based on individual or team sales, not the company’s profits as a whole.

So profit sharing is the best fit because it ties employees’ pay directly to the business’s profits.