Final answer:
Bonus systems are well-defined incentive mechanisms tied to performance, whereas profit sharing involves the distribution of a company's profits among employees. Both can lead to increased productivity and employee satisfaction, aligning individual incentives with the success of the business.
Step-by-step explanation:
Bonus systems and profit sharing represent mechanisms by which companies reward their employees. Bonus systems are typically predefined and often tied to individual or company performance metrics, not typically at the discretion of an entrepreneur. In contrast, profit sharing involves distributing a portion of the company's profits and earnings among employees.
The impact of such systems on employee motivation is significant. Since employees stand to benefit from the success of business, there is often an enhancement in productivity. This approach aligns employee incentives with the company's performance, fostering an environment where merit and effort are rewarded. For example, piece-rate systems pay employees based on the amount of work they complete, creating a direct correlation between productivity and compensation.
In a competitive market, businesses that prioritize economic factors over biases can attract and retain talented employees who are motivated by these reward systems. Universal Generalizations suggest that free enterprise systems that support such rewarding mechanisms lead to higher quality of life and satisfaction among citizens. Additionally, systems that reward effort and compensate for costs can help ensure fair treatment and financial equity in the workplace.