Profit sharing

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Profit sharing is a form of pay . Instead of or in addition to a fixed salary, an employee receives a share of the company's annual surplus.

history

A distinction can be made between different causes and goals for profit sharing models:

The oldest known such remuneration in Germany was introduced in 1847 by the Mecklenburg landowner, agricultural scientist and social reformer Johann Heinrich von Thünen . It remained successful for almost 50 years. Its introduction combines modern economic studies v. Thünens with traditional patriarchal responsibility for the development of suitable welfare institutions in the "estate family".

Profit sharing as an incentive for effective and high-quality work and to bind the workforce to the company reflects the participation model of the Berlin entrepreneur Otto Lilienthal . In March 1890 he introduced a 25 percent profit-sharing scheme for all employees.

In the early 20th century, profit sharing was mainly used as an effective means of maintaining or Restoring social peace between employers and workers and improving the economic situation of the latter . Henri Fayol writes in his work "Allgemeine undindustrie Verwaltung" (1929) that the principle of profit sharing is a conceivable approach to reconciling the conflict between labor and capital, but admits that to date there has been no ideal practical implementation. He also states that the principle cannot be applied to companies that are not for profit (government, non-profit or scientific societies) or to companies that work at a loss.

Other well-known companies with profit participation are the Carl Zeiss Foundation and the Telegraphen-Bauanstalt von Siemens & Halske . The Berlin wood manufacturer Heinrich Freese later described the introduction in his company in detail in several publications .

As an incentive system, profit sharing is more closely related to free economic structures and has been replaced by other incentive systems with the introduction of social legislation and the trade unions as collective bargaining partners .

Today's meaning

Profit-sharing models are of little importance today compared to performance-based wages, target bonuses and other incentive systems . These employee profit-sharing schemes are not in a fixed relationship to the profit of the company as a whole or only apply to a selected group of employees ( bonuses , royalties ) and offer the entrepreneur greater scope for creativity. Company investments in the form of employee equity investments are also widespread , e.g. B. Employee shares or profit participation rights .

A “real” profit sharing exists when salary components (regardless of individual performance) depend on the company's profit. In the case of a fixed wage agreement, the companies bear the economic risk; in the case of profit sharing, part of this risk is transferred to the employee. If the employee is risk averse and economically unable to bear the risk, he will prefer a fixed wage. Above all, however, the knowledge about (possible) future profits and the influence on them is unevenly distributed. While the company has extensive knowledge and also makes decisions about products, production and market strategies , the employee does not have this knowledge to the same extent. The company will therefore propose a high profit-sharing option if it is anticipating low profits; conversely, the employee will conclude from the profit-sharing offer that the profit prospects are poor.

Tax treatment

If the recipient is an employee of the company granting the profit sharing, the profit sharing is part of the income from non-self-employed work and is subject to wage tax deduction . If the recipient is an entrepreneur, the profit sharing is part of the operating income , may be subject to sales tax and is part of the income from commercial operations or the income from self-employed work .

See also

Revenue sharing

literature

Individual evidence

  1. ^ Victor Böhmert: The profit sharing of employees in Germany, Austria and Switzerland. Dresden 1902. p. 9 ff
  2. ^ Kurt Gutsche: Profit sharing in Germany and England, Inaugural dissertation Greifswald, 1932 p. 3
  3. ^ Wording of the announcement on the introduction of profit sharing in the machine factory "Otto Lilienthal"
  4. ↑ Victor Böhmert: The profit sharing. Studies on wages and entrepreneurial profits. Leipzig 1878.
  5. ↑ Ernst Abbe: About profit sharing of workers in big industry . Lecture given on January 28, 1897 at the Staatswissenschaftliche Gesellschaft zu Jena. Jenaer Volksblatt of January 31, February 2 and 3, 1897, No. 26, 27, 28. In: Ernst Abbe: Lectures, speeches and writings with socio-political and related content , Georg Olms Verlag 1989
  6. ^ Ronnie Schöb: Tax reform and profit sharing, 2000, ISBN 3-16-147386-8 , pages 160-161