Profit-sharing plans distribute rewards based on company-wide financial performance, which often feels abstract or uncontrollable to front-line or non-executive employees. If they cannot see a clear connection between their daily work and the bottom line, motivation and engagement may suffer.

Extract from HRCI-aligned HR knowledge (Total Rewards domain):

Strategic compensation models highlight that for variable pay to be effective, ''employees must understand the connection between performance and reward.'' SPHR guidance warns that profit-sharing can be demotivating if employees feel too far removed from the metrics or don't perceive personal impact on results.