3 4 0

CHARACTERISTICS ASSOCIATED WITH SUCCESSFUL GAINSHARING PLANS

1. Organizational unit of less than 500 employees.
2. Stable productivity and costs or a few years.
3. Simple financial measures of productivity and costs.
4. Growing or expandable market for the firms products or services.
5. Product costs affected by employees behavior.
6. Organizational climate characterized by openness and high level of rust.
7. Participative style cl management.
8. No union or a union favorable ro cooperative efforts.
9. limited or no use of overtime.
10. Seasonal stability of sales or production.
11. High to moderate interdependence among employees tasks.
12. low capital investment changes for the past few years and next few years.
13. Few product changes in near past and near future.
14. Corporate financial stall trusted by employees and able to communicate
financial information about productivity and costs.
15. Willingness on the part of management to disclose corporate 6nancial
results to employees.
16. Trusted plant manager able to communicate production goals and results.
17. Management able to work with critical suggestions for change.
18. Supportive attitude by the parent corporation toward the organizational
units change and development.
19. Employees who are technically knowledgeable and motivated by participation
and greater 6nancial incentives Maintenance and engineering staff competent a
id willing to respond to new challenges.

thousands of manufacturing and service organizations. Exhibit 113 lists

characteristics associated with successful gainsharing plans. The gainsharing
system is intended to improve overall organizational performance by allowing
employees who contribute to performance results to share in the proceeds.

There are four commonly used organizationwide gainsharing plans: Lincoln

Electric, Scanlon, Rucker, and ImproShare, along with variations of each.
Plans differ according to the degree of employees involvement and the types
of financial incentives.
Lincoln Electric Plan: The most successful gainsharing or productivity sharing
plan at a single company is the Lincoln Electric plan. Lincoln is a Clevelandbased manufacturer of welding machines and motors. Its gainsharing plan was
developed by James F. Lincoln in 1907. James, son of the founder, John C.
Lincoln, had begun work at Lincoln for $50 a month and a 2 percent sales
commission. He immediately saw a need for employees commitment to helping the
company develop new technology, so he created an advisory committee elected by
the workers, with one member for every loo employees. The plan he began in
1907 expended and was still thriving in 1999.
Under the Lincoln plan, employees are paid only for what they individually
produce. There are no paid holidays, no sick leaves, and nc. unions.
Promotions are based on merit, job reassignments must be accepted, and
overtime is mandatory. The basic compensation system at Lincoln rests on the
following principles:.(1) All compensation is based on piecework. (2) There
are no perquisites for managers. (3)After two years on employment, the worker
cannot be laid off. (4) There is no mandatory retirement.