Employment Growth and Stability under Profit-Sharing: A Longitudinal Study

This study tests the hypotheses that employment will increase and become more stable when firms replace traditional reward systems with a bifurcated approach incorporating profit-sharing. Time-series data for 443 publicly traded profit-sharing firms and a closely matched group of industry non-sharers were analysed before and after plan implementation. While there was evidence that profit-sharing generated short-term growth, little support emerged for its theorized effect on employment variability. Unlike previous reports, organizational size was more likely to influence the impact of share arrangements than was industry type.