Profit Sharing (PLR) is a variable remuneration model that aims to reward employees for their dedication and work performance. But is it advantageous for organizations to offer PLR? And what does it mean for employees? Read on and find out.
The adoption of PLR in companies is not an obligation and has no fixed value. However, studies have shown that organizations that adopt variable remuneration systems in their companies see a significant improvement in results and targets achieved.
Since PLR is a variable remuneration model, it can be paid out either monthly or annually. But it's important to make it clear that PLR should not be associated with a salary. The model is linked to pre-defined targets and other factors stipulated by the company in order to receive it.
What are the main benefits of PLR?
This type of variable remuneration tends to attract many workers, since the possibility of getting an increase in income depends solely on them. In addition, PLR works as a way of recognizing the performance of employees for their dedication and contribution to improving the company.
The greater appreciation of employees, together with the sharing of company profits and results, also guarantees greater transparency in the team's relationship. In other words, the team comes to recognize the importance of all work processes.
In addition, it is estimated that redundancy costs can be up to 15 times the value of a salary, and that the adjustment time for a new employee is around three to six months. In other words, in order not to lose the best employees, it is essential to provide a pleasant working environment that aims to guarantee good, quality service.
All these benefits end up reflecting positively on the company's image in the market and can be a good competitive advantage when it comes to increasing sales.
What are the most common ways of offering profit sharing?
There are two ways in which PLR can be offered to companies: through targets set in advance for the organization as a whole or with different targets for each department or employee.
In the first form, the company must define the growth target it wants to achieve, i.e. if the target is reached, a percentage of the profit is distributed among all the organization's employees.
In the second case, the extra bonus will depend on the performance of each employee or sector. For example, if a department manages to achieve 90% of the pre-established target, it will be paid 90% of the PLR.
It's also important to make it clear to employees that if the company doesn't make a profit, it won't be able to pay its staff. In order for there to be no communication noise, there needs to be transparency and employees need to be shown the absence of positive results.
If there is a profit, some important information should be noted:
- If the employee is dismissed, they are still entitled to receive the extra pay in proportion to the months they worked;
- Only registered employees are entitled to PLR, i.e. freelancers and interns do not receive the benefit;
- If the employee is off work for reasons such as maternity leave, accident or illness, they are also not entitled to the PLR, since it is understood that they have not helped to boost the company's results.
How to implement PLR in your organization
To adopt PLR in your company, you need to follow a few important steps. First, define a team responsible for developing the program, with the participation of employees, the employer and the person appointed by the union. The creation of participatory management is positive for both sides, since with a sense of belonging, employees will be more motivated to do a good job.
In addition, setting specific goals and objectives is also fundamental to the success of strategies. By planning indices involving profitability, productivity and deadlines, the company has greater control over results.
The third phase involves authenticating the program with the union. Once the program has been regularized and disseminated to employees, the results need to be monitored and analyzed by those responsible for monitoring the strategy indicators.
The final step in the process is payment. There are three options for extra pay: a fixed amount, with no hierarchical distinction; or a fixed amount for all employees, together with a further amount proportional to the position and salary.
After all these steps, if PLR is offered as a benefit but without the necessary information for employees to achieve the target, the whole PLR implementation plan will be undermined. That's why it's important to set challenging but achievable targets for employees.
However, if your company still finds it difficult to implement PLR, the best alternative is to hire complete business management software.
With Actio it's simple to adopt PLR
With Actio Bonus Management é possível ter acesso, em tempo real, aos resultados individuais por área e por colaborador. Além disso, com o software você garante mais transparência ao divulgar às metas já cumpridas no trabalho e a bonificação extra que cada funcionário irá receber e impede que sua empresa cometa erros de aplicação.
With Actio's help, your company's staff will certainly be more motivated and productive, helping the organization to expand.
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