The adoption of profit sharing (PLR) in a company is becoming increasingly popular. But do you know how this process works and the main benefits? PLR is a great advantage for a company. However, there are still many people who are unaware of its function, even employees who are entitled to receive the reward. 

PLR is a benefit distributed to employees in return for the company's positive profit balance after a certain period. In other words, employees are rewarded if the company you work for is doing well in terms of sales.

PLR payments are made through a collective bargaining agreement and come in a number of forms: equal shares for all employees regardless of position and salary; division according to the pay and position of each employee or the payment of an equal share for all employees and another share according to salary and position. 

Adopting PLR in your company helps to increase company productivity and employee satisfaction. But in addition to PLR, there are also other types of variable remuneration on the market. That's why, before choosing which is best for your company, it's important to know the main differences between the other models. 

What are the most common types of variable remuneration?

1. Reward with experiences

Rewards with experiences are represented by moments and opportunities that employees experience within a company through the organization's actions. This extra commission can be given individually to a worker who has stood out, or collectively to sectors or teams that have performed well. Rewards for experiences can include certificates or trophies for good work, dinners, gift vouchers to stores, or even trips paid for by the company.  

2. Bonus

Bonuses are a means that companies use to reward workers for all the effort they put in, and they also help to motivate employees. The payment of the extra salary is usually linked to the company's final revenue, i.e. if the company makes a profit during the fiscal year, the workers will be told if they will receive the bonus. The bonus can be paid in the form of time off, or as an extra payment on top of the fixed salary. 

3. Sales commission

The aim of sales commission is to offer employees a percentage of the value of their sales, i.e. the more they sell, the more profit they will make at the end of the month. This strategy is widely used in the commercial area and many companies offer sales commission in order to encourage employees to do their best and work hard to increase the conversion of leads into customers. 

4. Incentive campaigns

In the case of incentive campaigns, rewards work as a way of rewarding the results achieved by the worker. Reward targets are pre-established according to the production objectives of the work groups and the degree of difficulty of the targets set. Rewards can range from time off, extra pay and benefit cards.

5. Competency-based pay

Competency-based pay is one of the models that large companies adopt in order to make their employees more engaged and motivated. In general, it is awarded once a year and the value of the award is based on the employee's performance and how they have carried out their work in accordance with the goals set by the organization. However, in this case, the more skills required to perform the job, the higher the award to the employee.

6. Profit Sharing Program (PPR)

The PPR, like the PLR, is based on remunerating employees according to the achievement of goals and objectives. In this case, the company shares its earnings with the professionals who have worked to achieve the pre-defined goals. 

What is the purpose of the reward system?

In general, the reward system tries to reconcile the ambitions of both the employee and the company. In this way, employees are rewarded for work that also benefits the company because it promotes greater profitability.

When the variable remuneration model is applied correctly in the company, it promotes a greater sense of belonging for the employee and also keeps them more motivated to do their work, because they know that if they dedicate themselves, they will benefit later. 

The biggest advantage of adopting profit sharing, among all the other models presented, is the guarantee that the company will have a more profitable business. This is because one of the characteristics of the profit-sharing program is the certainty that the company will not be harmed by the adoption of the reward system, since the extra bonus to the worker is only given in the face of a positive economic result at the end of the company's activities. 

To be implemented, there must be an agreement between the company and employees through a convention, joint committee or collective agreement. Once they have reached a decision, rules are laid down and deadlines are set for reviewing the method and payment criteria.

Employees in the private sector who are registered, those on probationary contracts or even those hired on a temporary basis are eligible for the bonus. 

How can Actio's software help you implement PLR in your company?

Now that you've understood how profit sharing works, it's clear that if your company wants to increase productivity and results, adopting variable remuneration methods is the best option. 

With that in mind, Actio developed software responsible for managing any type of variable compensation. With the Actio Bonus Management it is possible to guarantee more transparency and efficiency for the company, since the employees, together with the company, have access in real time to the pre-defined objectives, the goals already achieved and the bonus they will receive. 

With the adoption of software by the company, the performance of all teams and sectors improves, as well as achieving transparency, success and quality in processes. That's why you can count on Actio to promote your company's strategy.

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