Final answer:
A system where employees share in cost savings made by the firm is known as gainsharing or profit sharing, which often leads to improved productivity as employees benefit from the success of the business.
Step-by-step explanation:
A system that allows employees to share in any cost savings made by the firm is typically known as a gainsharing program or profit sharing. Such programs are designed to incentivize employees by giving them a stake in the company's efficiency and profits and earnings distributed among employees. When employees directly benefit from the success of the business, this often leads to improved productivity, as they share in the benefits of the cost savings and enhanced performance of the company.
Employee-Owned Businesses are variations where employees have a say or ownership in the company. These arrangements, such as co-operatives, mean that the employees collectively make decisions and may benefit from the company's success. This also relates to the concept of collective bargaining, where employee rights and working conditions can be improved, and all workers may benefit.
The involvement of employees in the financial success of a company can make economic policies more favorable for both the employees and the business, ultimately leading to a situation that is popular with both economists and the general public because of how it effectively can lead to increased earnings for the workers involved.