Q. What are the three key elements that make a Gainsharing Plan successful?

The three key elements needed for Gainsharing success are:

• Simplicity – Employees have to understand the plan in order for them to buy into it.

• Involvement – The more involvement the employees have in designing the plan, the more they will take ownership of it.

• Metrics – Employees must have direct control over the plan’s measures of performance.

Q. Do I have to reveal sales, profit margins and/or profits to employees if I start a Gainsharing Plan?

A. No. Because employees can only directly affect productivity, safety, and quality levels, they only need to be briefed on those metrics which are within their control. Profit levels are affected by many things from depreciation schedules, taxes, utility bills, material costs, to changes in government regulations. Again, employees need only be told how they are performing on things in their control.

Q. Our company does not have good measures of productivity, so how can we measure improvements in it?

A. That is where experience comes in. We at Imberman and DeForest, Inc. have engineered over 100 Gainsharing Plans. We have the ability to develop the needed measures from existing production and quality reports thereby bringing you fresh insights into the causes of inefficiencies and their actual costs.

Q. Are supervisors and office employees included in a Gainsharing Plan?

A. The nature of your business governs our recommendations in this matter. Some Gainsharing plans have included just direct labor while others included direct and indirect labor. Still others included all labor, supervisory, and office employees. The determining factor is for us to gauge who has a direct impact on those metrics their Gainsharing plan measures.

Q. We have a high percentage of Spanish-speaking workers. How does this affect your success rate in improving client productivity and profitability?

A. A. Our bilingual experts know how to incorporate four key aspects of traditional Latino culture into successful programs that meet clients’ goals:

  • The Latino tradition of working together in collaborative social groups
  • The Latino tradition that values mutual support and collaboration
  • The Latino tradition that accepts authority and prefers specific work goals and instructions
  • The Latino tradition of responding positively to incentives that reward improved performance on a short-term basis

Q. If Gainsharing rewards employee ingenuity and effort, how does Gainsharing account for the costs and improved results of new equipment and/or better technology?

A. Correcting for the effects of capital investment is simple. We build flexibility into our Gainsharing Plans so that management receives a fair return on their investments.

Q. My customers demand lower prices every year. Does Gainsharing take this into account?

A. Again, we structure our Gainsharing Plans with the flexibility needed to adapt to changes in customer requirements.

Q. It makes sense to reward employees when their performance exceeds the thresholds pre-set by management. But what happens when employee performance is below the thresholds?

A. Employees are told before the plan starts that “they share gain and they share the pain.” Any losses from sub-par performance must be counterbalanced before employees earn a payout for improved performance.

Q. Our company has tried bonus plans in the past without success. Will Gainsharing
azovercome employee skepticism?

A. That is where the credibility of an outside expert pays off because he has no past to defend. Your company has a higher chance of success when employees deal with an experienced third party who has no connection with past efforts. The purpose of our presence is to boost company profitability and employees’ job security.

Q. Our company has a profit sharing plan. Employees have received year-end bonuses in recent years. Should our company add Gainsharing to the mix?

A. No doubt your employees appreciated their year-end profit sharing bonuses. However, it has been our experience that few employees have the vision to equate what they do on a daily basis to a bonus paid out at the end of the year.

We have asked employees why they received the amount they received, and and what they did to earn their year-end payout. The most frequent answer was that they “worked hard” for it.

On the other hand, Gainsharing is paid out short term because hourly employees have short horizons. The short term nature of Gainsharing enables employees to have a clear line-of-sight. Employees know what they must do today to earn Gainsharing tomorrow.

Q. Our company has a union. Does that change the implementation of a Gainsharing Plan?

A. The more you involve the leadership of your employees’ union in developing the plan, the greater their support.

Q. Is the time and effort worth the benefits of Gainsharing?

A. Yes. There is an old saying: “It is better to fight to the competition rather than each other.” Gainsharing makes this happen.