Gain Sharing

A gain sharing plan aims at enhancing productivity or dropping labour costs & sharing the resultant gains (typically a lump sum payment) along employees. It is depend on a mathematical formula that compares a baseline of performance with real productivity throughout a given period. While productivity exceeds the base line an agreed-upon savings is shared with workers. Gain sharing is built around the idea which involved employees will enhance productivity through more influenced use of organisational resources. Three major kind of gain sharing plans are presently in use: Rucker, Scanlon Plan, Plan, and Improshare. Improshare refer for enhanced productivity through sharing. This strategy is similar to a piece rate except that it rewards all employees in an organisation. Input is measured in hours & output is measured in physical units. A standard is computed and weekly bonuses are paid depend on the extent to which the standard is go beyond. The employees and the organisation each retain payment for 50 % of the improvement.

Unlike profit sharing schema which has deferred payments, gain sharing strategy are current distribution plans. They are directly associated to particular behaviour and are distributed on a monthly or quarterly basis. Gain sharing strategy tends to raise the level of cooperation across workers & teams by giving them an ordinary goal. Managers are not mandatory to base their calculations on difficult mathematical formulae, nor are they require to closely looking into the particular contributions of individuals or independent teams. This is easier for both, to formulate bonus calculations and to attain employee acceptance of those plans. However ,Gain sharing plans  protect low performers. Where rewards are spread out across a big number of employees, bad performers might get rewards for non performance at the cost of the brilliant performers. Gain sharing plans might fail due to other cause as well: lack of management support for employees' participation, poorly designed bonus formulae, boosting cost factors that undermine the bonus formula, lack of trust, bad communication, and apathy on the part of workers. To build up an organisation-wide incentive plan that has an opportunity to survive, allow alone succeed careful, in depth planning ought to be precede implementation. A climate of trustworthy labour management in also absolutely necessary. The financial formula should be easy and should measure & reward performance along a specific set of measurable objective and a clear allocation method.