Gainsharing: An Incentive Plan or Employee Involvement?
Contributor: Bob Masternak Posted: 12/23/2009 12:00:00 AM EST | 1

What's gainsharing? Isn't it a compensation system that places a big carrot in front of employees in the form of a financial incentive? Isn't it the same as profit sharing that pays an annual bonus to workers when times are good? Is it about people working harder in order to make a little more money? These are but a few misunderstandings about gainsharing. Companies that could benefit the most may immediately close their minds to the approach due to a lack of understanding an unwillingness to change.

The name "gainsharing" may be partly responsible for this misunderstanding. It gives a narrow focus to the incentive side of gainsharing and does not necessarily indicate what truly is involved in a successful gainsharing plan. This view holds gainsharing up as a super carrot, as an incentive to get employees' attention and to encourage harder work. It's true that the bonus element is an important part of any gainsharing plan, but to view it strictly as an incentive program is a mistake. The bonus aspect is a very visible part of a gainsharing plan. The potential to earn a bonus quickly can get employee attention. However, companies that have experienced the benefits of improved involvement, communications and teamwork would argue that their gainsharing plan is much more than a compensation program.

Six months after a gainsharing plan was installed I asked an employee, "What has changed since the plan began?" The employee’s first comment was, "People listen; we can get things done around here. I'm able to get my ideas implemented." The second comment was, "There is better team work. The other production shifts help out by having things in shape when we report to work." The person’s third comment was, "The monthly bonuses we have been earning are great." Interesting, money wasn’t the first thing the person mentioned. Why? The communication...