Profit sharing is a compensation strategy where a company distributes a portion of its profits to its employees. This approach aims to motivate employees by aligning their interests with the company's success. When the company performs well financially, employees receive bonuses or additional payments, which can enhance job satisfaction and productivity. Typically, profit sharing plans are structured based on a predetermined formula that considers factors like individual performance or tenure. Companies like Google and Starbucks have implemented such plans to foster a sense of ownership among employees. This practice can also help attract and retain talent in a competitive job market.