Gain sharing

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Meani ng Gain sharingis asystemofmanagementused by a

business to get higher levels of performance through the involvement and participation of its people. As performance improves, employees share financially in the gain. Gain sharing is about people working smarter together and not just working harder.

Gain sharing should not beconfused withprofitsharing. There are many differences between Gain sharing and profit sharing.Gain sharing is also calledas "savingssharing.

In other words, a companyshareswith employees , the 5/15/12

There are two important parts of a Gain sharing system: 1) 2)

One is abonus calculation. The second is a structured system for employee involvement.

Because of these two parts, Gain sharing is best seen as an "organizationaldevelopment" tool.
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It is not just a bonus or "incentive plan."

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Definiti on
Gain sharing is a method of industrial remuneration under which an employer undertake to pay to his employees a share in the net profits of the enterprise in addition to their regular wages.

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Objectives of Gain sharing To supplement the earning of the workers.

To enable the workers to participate in the prosperity of their firm. To create a sense of partnership among workers and management. Sharing of the firms profit with the employees is considered a sound employee relations program. Aims to modify employees attitude to achieve greater employee efficiency, productivity, and loyalty to the firm, and keener interest in its welfare.

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It is the extra payment given to the workers in addition to usual wages and allowances.

Features of Gain sharing

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It is paid out of the net profit as per the agreement. It is possible at both unit level and industry level. The payment is generally made in the cash form or through transfer the money in employee PF. Workers share only the gains not the losses of the firm.

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Elements of gain sharing plan Gains and resulting payouts are self-funded based on
savings generated by improved performance. The plan commonly applies to a single plant, site, or stand-alone organization. However, some organizations have levels of sharing across multiple locations or corporation-wide. Performance is typically measured across departments, units, or functions. Measures are typically based on operational measures (productivity, quality, spending, customer service) and are more controllable by employees rather than an organization-wide measure of profits.

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Many plans often have a year-end reserve fund to account for deficit periods. Employees often are involved with the design process. All employees are eligible for plan payments. The bonus is often paid as an equal percentage of compensation or equal cents per hour worked, rather than paid on the basis of individual performance. A supporting employee involvement system is part of the plan in order to drive improvement initiatives. Plans are often reviewed at least annually and adjustments may be made that make sense for both the company and employees.
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Advantages of Gain Helps companies sharing achieve sustained improvement in

key performance measures. Rewards only performance improvement. Payouts are self-funded from savings generated by the plan. Aligns employees to organization goals. Fosters a culture of continuous improvement. Enhances employee focus and awareness.
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Increases the feeling of ownership and accountability

8) Enhances the level of involvement, teamwork and cooperation. 9) Supports other performance improvement efforts and helps promote positive change. 10) Promotes morale, pride, and more positive attitudes toward the organization.

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Disadvantages of Gain sharing Measures are narrower than organization-wide profit

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and therefore gains may be paid even though profits may be down. 2) Requires a participative management style. 3) Requires that management openly shares information related to performance measures. 4) Employees may question or challenge management decisions that may adversely impact a gain. 5) Increases the level of organizational stress since everyone has more of a financial stake in the organization's success. 6) Applies best to and a work environment that requires teamwork and collaboration rather that individual entrepreneurship. 7) Paid on the basis of group performance rather than 5/15/12 individual merit.

When does gain sharing work best? can be It works best when company performance levels
easily quantified and in a work environment that is based on openness and trust. A supporting system of employee involvement will significantly enhance the long term effectiveness of the plan. Requires management commitment, training and frequent and ongoing communications.

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What is the best way to implement gain Executives and managers must be educated in order to develop a clear understanding of the Gain sharing sharing philosophy and the management style required for success.

If an organization moves forward with a plan, it is best to form a team of employees to work on various elements of the project.

The team is involved in preparing many of the rules of the plan and final approval for the plan details from top management.

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Supervisors and managers are trained in the relationship of their role toward the plan.

Teams are formed and trained in order to work on performance enhancement initiatives.

It's best to have an expert on Gain sharing to guide and facilitate the process in order to work through the pitfalls and to avoid payout out of false gains.

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Conclusi on sharing plans view Companies with successful Gain

Gain sharing as much more than a bonus or incentive system. Instead, they see the system as an important part of their business strategy and a method to drive organization change. Gain sharing can be a powerful tool if installed and managed by a company that truly believes in its people.

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