Definition:

The employees are rewarded on the basis of the success of the organization over a specified
time-period. Those plans develop a sense of belongingness, co-operation, understanding and
teamwork among employees.

Plans within:

Profit Sharing:

Profit sharing involves the determination of organization's profit at the end of the financial year
and the distribution of a percentage of the profits to employees, qualified to share the earnings.
Profit sharing is an additional payment over and above regular salary payment.

Employee Stock Plan:

In employee stock plan, employers provide employees company stocks. [ CITATION

Edw13 \l 1033 ]. The principle of stock plan is to let employee add value to the
company and benefit from it. It is a form of compensation, which enables the employees to
purchase shares of their company and gain from possible rises.

Advantages:

 Attract and retain promising employees.

 It commands employee loyalty.
 Create wealth for employees without involving large cash flow to the company.
Disadvantages:
 When an employee dies or retires, the company must spend money to purchase his stock
from him; that’s more costs.
 When an employee leaves the company, he is not forced to give back his stocks. He can
still have some voice in company decisions, and he will receive the value of his stock when he
retires. (Ronald, 2017).
 Difficult and expensive to implement.