Question

Compare risk-sharing and success-sharing plans.

Answer 1

Risk-sharing plans - A plan in which the base pay is made to reduce by a certain amount in comparison to a level which is offered in a success-sharing plan is called a risk-sharing plan. While doing business, a part of the risk is transferred from the company to the employee.

Success-sharing plans - A plan in which the base pay wages are fixed and variable pay adds on for each successful year is known as a success-sharing plan. In case the company is doing well, the employee receives additional pay. Unlike risk-sharing plan, there are no deductions even if the company bears any loss. The employee receives fixed base pay wage.