Abstract This paper investigates gainsharing plans and identifies problems that may limit potential gains in productivity. It explains how contemporary gainsharing plans constitute social dilemmas and provide an opportunity for "free-riding" and thus lower productivity. It also presents theoretical and experimental findings that suggest hypotheses regarding the impact on productivity of a fairer distribution rule and worker participation in the development of such a rule. The paper then describes two experiments designed to test these hypotheses. The experimental data reported in this study indicate that fair distribution rules that are participatively developed can ameliorate the social dilemma inherent in gainsharing plans. The paper offers prescriptions for improving gainsharing plans and discusses other implications of our findings. Show Journal Information Founded in 1956 by James Thompson, the Administrative Science Quarterly is a peer-reviewed, interdisciplinary journal publishing theoretical and empirical work that advances the study of organizational behavior and theory. ASQ publishes articles that contribute to organization theory from a number of disciplines, including organizational behavior and theory, sociology, psychology and social psychology, strategic management, economics, public administration, and industrial relations. ASQ publishes both qualitative and quantitative work, as well as purely theoretical papers. Theoretical perspectives and topics in ASQ range from micro to macro, from lab experiments in psychology to work on nation-states. An occasional feature is the "ASQ Forum," an essay on a special topic with invited commentaries. Thoughtful reviews of books relevant to organization studies and management theory are a regular feature. Special issues have explored qualitative methods, organizational culture, the utilization of organizational research, the distribution of rewards in organizations, and critical perspectives on organizational control. Publisher Information Sara Miller McCune founded SAGE Publishing in 1965 to support the dissemination of usable knowledge and educate a global community. SAGE is a leading international provider of innovative, high-quality content publishing more than 900 journals and over 800 new books each year, spanning a wide range of subject areas. A growing selection of library products includes archives, data, case studies and video. SAGE remains majority owned by our founder and after her lifetime will become owned by a charitable trust that secures the company’s continued independence. Principal offices are located in Los Angeles, London, New Delhi, Singapore, Washington DC and Melbourne. www.sagepublishing.com Gainsharing Organizations that want employees to focus on efficiency may adopt a gainsharing program, which measures increases in productivity and effectiveness and distributes a portion of each gain to employees. For example, if a factory enjoys a productivity gain worth $30,000, half the gain might be the company's share. The other $15,000 would be distributed among the employees in the factory. Knowing that they can enjoy a financial benefit from helping the company be more productive, employees supposedly will look for ways to work more efficiently and improve the way the factory operates. Gainsharing addresses the challenge of identifying appropriate performance measures for complex jobs. Even for simpler jobs, setting acceptable standards and measuring performance can be complicated. Gainsharing frees employees to determine how to improve their own and their group's performance. It also broadens employees1 focus beyond their individual interests. But in contrast to profit sharing, discussed later, it keeps the performance measures within a range of activity that most employees believe they can influence. Organizations can enhance the likelihood of a gain by providing a means for employees to share knowledge and make suggestions, as we will discuss later in this chapter. Gainsharing is most likely to succeed when organizations provide the right conditions. Among the conditions identified, the following are among the most common:
HOW GAINSHARING MOTIVATES EMPLOYEES Many firms have had a difficult time developing compensation systems that were simultaneously motivational and cost-effective. Managers have reported that gainsharing motivated employees in their organization in several ways. First, financial rewards, applied in the proper setting and in the proper way, can be a powerful motivator. In addition, gainsharing provides:
Compensation Management
Variable pay Plans >>
[USA] Broadbanding Gainsharing Plans Improshare Improshare, which stands for Improved Productivity through Sharing. Improshare was created by Mitchell Fein, an industrial engineer. The Improshare plan is a form of gainsharing that focuses on sharing physical productivity gains with employees. Standard hours are calculated for the production of each unit, and Improshare pays a bonus when the time needed in the production process is reduced. Gains realized by working either faster or more efficiently are then split between the employer and employees, and the employee portion is shared among all workers. Improshare does not require any form of employee participation, although participation is compatible with the process. Improshare bonuses are based on the overall productivity of the work team. Improshare output is measured by the number of finished products that a work team produces in a given period. Both production (direct) employees and nonproduction (indirect) employees are included in the determination of the bonus.' Since a cooperative environment benefits all, Improshare promotes increased interaction and support between employees and management. The bonus is based not on dollar savings, as in the Scanlon and Rucker Plans, but on productivity gains that result from reducing the time it takes to produce a finished product. Bonuses are determined monthly by calculating the difference between standard hours (Improshare hours) and actual hours, and dividing the result by actual hours. The employees and the company each receive payment for 50 percent of the improvement. Companies such as Hinderliter Energy Equipment Corporation pay the bonus as a separate check to emphasize that it is extra income. Scanlon plan "Cost saving productivity-incentive plan" Joseph Scanlon was a union organiser in a steel works, who put a proposal to the owners aimed at saving the jobs of his union members. The steelworkers agreed to work in a more efficient way in return for an equal share of the savings that this generated. Since its development in 1927, the Scanlon plan has been implemented in many organizations, especially in smaller unionized industrial firms. The basic concept underlying the Scanlon plan is that efficiency depends on teamwork and plant-wide cooperation. The philosophy behind the Scanlon Plan is that employees should offer ideas and suggestions to improve productivity and, in turn, be rewarded for their constructive efforts. The plan requires good management, leadership, trust and respect between employees and managers, and a workforce dedicated to responsible decision making. When correctly implemented, the Scanlon Plan can result in improved efficiency and profitability for the organization and steady employment and high compensation for employees. A Scanlon plan can help reduce a firm’s labor costs without corresponding decreases in productivity levels. According to Scanlon's proponents, effective employee participation, which includes the use of committees on which employees are represented, is the most significant feature of the Scanlon Plan. Under a Scanlon plan, employees make suggestions for how to improve a firm’s productivity and offer those suggestions to a review committee for its consideration for implementation. If the review committee accepts the plan and its implementation results in increased efficiency, the gains of that efficiency are shared with employees. Incentive rewards are paid to employees on the basis of improvements in preestablished ratios. Ratios of labor costs to total sales value or total production or total hours to total production are the most commonly used. Savings due to differences between actual and expected ratios are placed in a bonus fund. A predetermined percentage of this fund is then split between employees and the organization.  How Scanlon plan is implemented It starts with the top-level managers, they sit together and discuss about the formulation and implementation of Scanlon plan. After thorough discussions they come up with Scanlon plan Roadmap as to how to put the plan into the practice. Before putting the plan into practice, the roadmap is communicated to all the employees irrespective of positions in the organisation for their acceptance. If the roadmap is not accepted by the majority of people in the organisation, it will be stopped. If it is accepted by the majority, a separate team is created to formulate a written plan as to how to put the Scanlon plan in to practice in the organization. Finally, written plan of Scanlon plan should be approved by all in the organisation so as to finally put it into practice. For the purpose of monitoring implementation of the written plan of Scanlon plan, subcommittees are formulated. The Scanlon plan is not a true profit-sharing plan, because employees receive incentive compensation for reducing labor costs, regardless of whether the organization ultimately makes a profit. Organizations that have implemented the Scanlon plan have experienced an increase in productivity and a decrease in labor costs. Also, employee attitudes have become more favorable, and cooperation between management and workers has increased. Illustration: A firm might have a target ratio of 1. In this case, if the company expected to do $100,000 in sales, it would attempt to keep its labor costs to $10,000. If employees are able to hit the same sales value of production with a ratio that’s lower than 1, the gains of that efficiency are shared with firm and employees. For example, if the firm's workforce were able to realize $100,000 in sales value of production with only $9,000 in labor costs, the $1,000 in savings would be split among the employees and their firm. Rucker plan The Rucker plan, almost as old as the Scanlon plan, was developed in the 1930s by the economist Allan W. Rucker. The Scanlon formula measures performance against a standard of labor costs in relation to the dollar value of production, whereas the Rucker formula introduces a third variable: the dollar value of all materials, supplies, and services that the organization uses. The Rucker formula is calculated as follows: $ Value of Labor Costs $ Value of Production - $ Value of Materials, Supplies, Services The result is what economists call the “value added” to a product by the organization. The use of value added rather than the dollar value of production builds in an incentive to save on other inputs. Team Bonuses and Awards In contrast to gainsharing plans, which typically reward the performance of all employees at a facility, bonuses for team performance tend to be for smaller work groups. These bonuses reward the members of a group for attaining a specific goal, usually measured in terms of physical output. Team awards are similar to team bonuses, but they are more likely to use a broad range of performance measures, such as cost savings, successful completion of a project, or even meeting deadlines. Both types of incentives have the advantage that they encourage group or team members to cooperate so that they can achieve their goal. However, depending on the reward system, competition among individuals may be replaced by competition among teams. Competition may be healthy in some situations, as when teams try to outdo one another in satisfying customers. On the downside, competition may also prevent necessary cooperation among teams. To avoid this, the organization should carefully set the performance goals for these incentives so that concern for costs or sales does not obscure other objectives, such as quality, customer service, and ethical behaviour. What common condition is necessary for gainsharing to be successful in an organization quizlet?What common condition is necessary for gainsharing to be successful in an organization? a gainsharing program that gives employees a bonus if the ratio of labor costs to the sales value of production is below a set standard.
What is the focus of gainsharing?Gainsharing is best described as a system of management in which an organization seeks higher levels of performance through the involvement and participation of its people. As performance improves, employees share financially in the gain.
What are the benefits of gainsharing?A gainsharing plan not only motivates a worker to put in his best performance, but also cultivates in him a sense of pride in his achievements at the workplace. This results in indirect benefits such as lower levels of employee attrition and subsequently, lower time and money spent in training new workers.
What is an example of gainsharing?As an example of how gainsharing works, consider a company producing rigid and steering differential axles for tractors. From its records, the company determined that every $1,000,000 of good product output required 10,000 worker hours.
|
Which of the following is a common condition for gainsharing to be a success in an organization?
zusammenhängende Posts
Urheberrechte © © 2024 ketiadaan Inc.
