Gainsharing is not an individual, piecework system. It is a group incentive, pay-for-performance wage system—a group bonus in which the entire factory workforce shares as a result of improving productivity above a certain level and decreasing rejects and rework.
The main benefits of Gainsharing are that it integrates communications, teamwork, goal orientation, quality/performance improvement, employee involvement and financial rewards into one system.
Providing spot bonuses is a very low-cost initiative for companies; unlike base-pay increases or year-end bonuses, spot bonuses usually amount to no more than 0.5 percent of total payroll, and often even less at . 25 percent, says Fuersich.
The Key Elements of a Profit-Sharing PlanWhen and how employees become eligible.The contributions to the plan.The vesting schedule.When employees are eligible to receive their benefits and how to file a claim for those benefits.The employees' basic rights under ERISA.
Gainsharing (sometimes referred to as Gain sharing, Gainshare, and Gain share): 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 Gainsharing plans? Programs under which both employees and the organization share financial gains according to a predetermined formula that reflects improved productivity and profitability.
Typically, only employees, not upper-level management, can receive spot bonuses. Employers also usually award them to individuals rather than teams. Spot bonuses can be monetary awards ranging from $50 to upward of $5,000 or vacation or gifts of the same value.
The Spot Award concept refers to small monetary or non-monetary rewards to provide immediate recognition for individual employees who perform short-term quality acts or service in an exceptional manner. Currently, agencies administer Spot Award programs as part of a Rewards and Recognition policy.
Spot Bonuses provide recognition for employees who take their game to a whole new level. The monetary value of a Spot Bonus Award varies based on the achievement. In general, the range is $300 to $3,000, which may include a departmental contribution.
The Scanlon plan is a gainsharing plan that provides a financial reward to employees for savings in labor costs resulting from their suggestions.
While there is no fixed definition of a "gainsharing" arrangement, the term typically refers to an arrangement in which a hospital gives physicians a percentage share of any reduction in the hospital's costs for patient care attributable in part to the physicians' efforts.
While gainsharing and profit sharing programs both provide employees with bonuses, profit-sharing programs offer rewards based on company profitability, while gainsharing plans reward employees for achieving specific performance metrics they can control.