Incentive systems such as profit sharing and gain sharing can be easily criticized on economic grounds. Each individual’s share in the extra profits generated by his or her own marginal effort is so tiny as to have no effect whatsoever on that individual’s self-interested behavior. However, these criticisms miss the point. The notion of plans such as the Scanlon plan is not to harness individual self-interest in the interest of the firm; it is rather to serve as a symbolic commitment of managers to a shared ownership in the firm.
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