The 4 rewards systems Gain-Sharing, Profit Sharing, Skill based pay and Flexible Benefits have different strengths and limitations.
Gain-Sharing rewards employees who reach specified production levels but need the development of complex formulars.
Profit sharing is the generic and simple reward for organizational performance – with the trade-off that the individual’s action often has no impact on the organizational performance. (e.g. a secretary just assisting the technical department has no direct, measurable impact on the departments sales)
Skill-based pay rewards employees for acquiring new skills with the problem to measure those skills accurately and comparable.
Flexible benefits – also called Cafeteria Benefits – are a basket of possible benefits that can be tailored to the individual, but have high administrative costs and often “already are there” and without relation to one’s performance.
The rewarding practices differ widely from country to country and even more company to company within a country.