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The question .. Critics of profit sharing plans maintain that these plans do not motivate employees to perform at higher levels. Under what conditions are profit sharing plans not likely to motivate employees?
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The answer example .. Under some conditions, a profit sharing plan will not motivate employees. If employees cannot see the link or relationship between their work/efforts and the company’s profits, they will not be motivated to work harder as there really isn’t an incentive promoting them to increase their productivity. These employees feel several steps removed from the company increasing profits. Another unmotivating factor is the fact that profits could vary from year to year, thus their earnings would as well which could lead to turnover or low employment security.