Any program that encourages employees to be more involved in the business — especially hourly and exempt employees — and ties additional pay to the improved business results generated from that involvement is gainsharing.
Some of the typical characteristics of effective gainsharing are:
- Self funded
- The measurement period is monthly to annually
- Performance is measured across all functions
- Supports process improvement
- No payout cap
Why do leaders implement gainsharing? The primary reasons is that it is a proven approach for motivating employee-driven process improvement. Employees are engaged, accountable and work hard by cooperating with one another to achieve improved business results.
We implemented gainsharing in one organization to reduce self insurance rates and to improve safety. Other examples include:
- To reduce absenteeism
- To reduce union grievances
- To reduce production errors and overtime
- To improve employee retention
- To reduce employee/management problems
- To improve customer or patient satisfaction
- To cut waste and rework
- To reduce waste
So, is your organization ready for gainsharing? The following short survey will help you assess this.