Asked by Halwi Ahmed on Jun 13, 2024
Verified
For the firm,the major goal of profit sharing plans is to:
A) force workers to incur some of the business risk.
B) overcome the monopsony problem of having to pay higher wages to attract additional workers.
C) overcome the principal-agent problem by better aligning the workers' interests with those of the firm.
D) reduce total compensation payments.
Profit Sharing Plans
A company program that gives employees a share in the profits of the company.
Principal-Agent Problem
A dilemma in which one party (the agent) is supposed to act in the best interest of another party (the principal) but may act in their own interest instead, leading to inefficiencies.
- Assess the consequences of compensation strategies like stock options and profit sharing on workforce productivity and organizational achievements.
Verified Answer
DK
Duygu KorkmazJun 19, 2024
Final Answer :
C
Explanation :
The main goal of profit sharing plans is to align the workers' interests with those of the firm, thereby addressing the principal-agent problem. By providing workers with a share of the firm's profits, they become more motivated to increase productivity and generate higher profits. This, in turn, benefits the firm as well as the workers._profit sharing plans do not aim to force workers to incur business risk, overcome the monopsony problem, or reduce total compensation payments.
Learning Objectives
- Assess the consequences of compensation strategies like stock options and profit sharing on workforce productivity and organizational achievements.