A Middle Atlantic state fastener company produced mild and stainless steel washers and fasteners for the merchant trade as well as specialty fasteners for the automotive and agricultural implement industries. Its employees were represented by the Steelworkers Union with whom the company enjoyed guardedly good relations. However, the company was facing severe problems with competitors located in Pacific Rim countries and needed to lower its per-unit costs in order to maintain sales and profit margins.With union cooperation, we engineered and implemented a Gainsharing plan in mid-contract. Employees received Gainshare earnings over and above their contractually obligated compensation. Payouts were based on good pounds of product shipped per hour worked. Pounds produced were adjusted by product mix, because stainless was harder to produce than mild steel fasteners, and specialty fasteners required additional extra effort.
The fact that the company implemented many of the employees’ ideas to eliminate waste by working smarter rather than harder had a substantial and positive effect on employee morale and worker relations with supervisors and managers.
Because management credibility was excellent, the company was able to substitute Gainshare earnings for most of the guaranteed increases in its three year contracts negotiated with the Steelworkers Union.