All Theses, Dissertations, and Capstone Projects
Year of Award
Master of Business Administration (MBA)
College of Business & Professional Studies
Manufacturing, Foreign Competition, Productivity, Management, Performance, Incentive, Compensation, Gain Sharing
U.S. manufacturers have always been interested in productivity. This has become a bigger issue with increased foreign competition and our own post-war productivity low in the 1970s. According to the U.S. Bureau of Labor, the United States ranked seventh, behind the United Kingdom, in average annual productivity growth in manufacturing during the period of 1960-1973.
Gainsharing is a form of incentive compensation that is designed to improve productivity and shares the resulting benefits between the company and employees. An important aspect of gainsharing is its link with participative management. Most plans require the use of formal suggestion committees that operate much like a quality circle.
There are several critical considerations involved in designing a productivity gainsharing plan:
1. Objective of the program.
2. Performance criteria and measurements.
3. Administration of the plan.
The objectives of the plan must be specific and useful in isolating problem areas. Measurement issues are probably the most difficult ad time-consuming aspect of gainsharing. The input and output measures used must be relevant and significant to operations, objectives and participants. Administrative decisions include the determination of the performance period, the sharing ration between the employees and the company, the methods of bonus payment, and provisions for future change.
Gainsharing can be an effective means to increase productivity and employee satisfaction. In spite of the complexities, the result can be good for employees and the company.
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This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Mitchell, Craig Manley, "Considerations in Developing and Designing Productivity Gainsharing Programs" (1987). All Theses, Dissertations, and Capstone Projects. 597.
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