Performance Improvement through Partnership and Commitment

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Gainsharing Background
What is Gainsharing?
Gainsharing vs. Profit Sharing
Gainsharing Defined
Gainsharing Philosophy
Gainsharing Q & A

What is Gainsharing? The Basics

Gainsharing is a literal term. As an organization gains, it shares. The typical Gainsharing organization measures performance and through a pre-determined formula shares the savings with all employees. The organization's actual performance is compared to baseline performance (often a historical standard) to determine the amount of the gain. Since gains are measured in relationship to a historical baseline, employees and the organization must change in order to generate a gain. Typical elements of a Gainsharing plan include the following:

  • Gains and resulting payouts are self-funded.
  • The plan commonly applies to a single plant, site, or stand-alone organization. However, some organizations have levels of sharing across multiple locations or corporation-wide.
  • Performance is typically measured across departments/units/functions.
  • Measures are commonly narrower and controllable by employees rather than being an organization-wide measure of profits. However, some organizations have measures as broad as profits.
  • Payout is often monthly or quarterly.
  • Many plans have a year-end reserve fund to account for deficit periods.
  • Employees are involved with the design process.
  • All employees are eligible for plan payments.
  • The bonus is often paid as an equal percentage of compensation or equal cents per hour worked, rather than paid on the basis of individual performance.
  • A supporting employee involvement system is part of the plan in order to drive improvement initiatives.

Gainsharing plans are customized, designed to support an organization's business objective

Gainsharing: A Team Based Approach to Drive Organization Change
Gainsharing: A Team Based Approach to Drive Organization Change

By Robert Masternak

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Masternak & Associates
Liberty Tree Plaza
1114 North Court, Suite 195
Medina, Ohio 44256
Phone: (330) 725-8970

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