Question

Q.5 A company is considering the introduction of worker's profit sharing scheme
in lieu of individual bonus scheme. As Cost Accountant prepare a report addressed
to the chicf exccutive highlighting the disadvantages of such scheme. Would you
recommend introduction of such a scheme in lieu of individual bonus scheme.​

Answer 1

Disadvantages of worker's profit sharing scheme

Explanation:

• Workers cannot see strong links between their effort and organization's performance.
• Worker's profit sharing scheme may result in some workers gaining from the effort of others with no greater effort on their part.
• Worker's profit sharing scheme may incur high administrative costs.
• Individual bonus scheme may result increase in performance of the employees.
• Rewards are directly according to the individual performance so as a cost accountant I would suggest introduction of individual bonus scheme than worker's profit sharing scheme.

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