Title: George Tuthill
1Bucharest Conference Gain Sharing
- George Tuthill
- Senior Business Development Manager
- Computershare Investor Services (Ireland) Limited
- Executive Member Irish ProShare Association
- george.tuthill_at_computershare.ie
2INTRODUCTION
- What is Gainsharing
- Objectives for Gainsharing
- Potential Advantages of Gainsharing
- Potential Disadvantages of Gainsharing
- Some Problems with Gainsharing
- Key Steps in Introducing Gainsharing
3What is Gainsharing?
- A Means of Rewarding Employees for Exceptional
Performance Above a Pre-determined Target Based
on Sharing Financial Gains. - Single Measurement
- or
- Separate Targets in Areas Such as Quality,
Productivity, Cost and Customer Service - Key Words
- Exceptional Performance
- Pre-determined Target
4Objectives of Gainsharing
- Specific Objectives May Vary from Company to
Company - Identify Communicate Key Performance Targets
Ensure Ongoing Measurement tracking of These
Targest - Enable All Employees to Identify How They May be
Involved - Encourage All Employees to Work with Management
to Continuously Improve These Targets - Provide a Method Whereby Employees May Share in
The Savings Generated
5Potential Advantages of Gainsharing
- Improves The Performance of The Organisation
- Provides a Focus For Key Performance Targets
- Will Help to Promote a Continuous Improvement
Culture - Rewards Employees Involvement
- Encourages Employees to Become Effective
Problem-Solvers - Can Help to Improve Relationships Between
Employees Managers - May Assist in Breaking Down Restrictive Work
Practices
6Potential Disadvantages of Gainsharing
- Prone to FREE-RIDING. An Individuals
Contributions May Not be Reflected in the bonus - Difficult for Employers to Administer
- Difficult for Employees to Understand
- Targets - Too Low (Difficult to Amend Scheme)
- Targets - Too High (Unattainable)
- Honeymoon Period
- Ongoing Management
- Periodically Reviewed
7Some Problems with Gainsharing
- Unrealistic Targets
- Must be Realistic Achievable
- Lack of Support from Management
- Need to Spend time Seeking Ideas
- Respond Positively to Suggestions
- Training
- Freedom to Employees to Realise Improvement
8Some Problems with Gainsharing Contd/
- Administrative Burden
- Costs of Measuring Accurately Success of Scheme
- Good Systems Required
- Maintaining Momentum
- Up Front Gains May Not be Maintained Year on Year
- Necessary to Raise the Performance Bar
- Review The Way Gains are Split
- Increases Percentage of Employee Share
9Key Steps in Introducing Gainsharing
- Who will Participate
- What Performance Measures will be Used
- Against what Baseline will Performance be
Compared - How will Gain be Determined Implemented
- How will the Scheme be Implemented
- When will the Arrangements be Reviewed
10Who Will Participate?
- Team-Based
- Departmental
- Organisation Wide
- Minimum Service
- Absent / Special Leave (Pro-Rata Payment)
11What Performance Measures Will Be Used
- Quality
- On-time Delivery
- Sales
- Waste
- Machine Down Time
- Absenteeism
- Overtime Reduction
- Labour Productivity
- Labour Costs
12Against What Baseline Will Performance Be
Compared
- Reference to Historical Performance Data
- Targets Should be Capable of Review by Management
- Companies may Re-establish the Benchmarks Each
Year Based on the Previous Years Performance or
Average of Previous 2-3 Years - Targets Expressed in Money Should be Reviewed
- Review For
- New Equipment
- Service Processes
- Other Changes
13How Will Gain Be Determined Implemented
- Split of Savings to Employees (25)
- or
- Different Splits Across Different Measures
- Equal Shares for ALL
- Earnings Base Shares
- Hours Worked
- Employment on Relevant Payment Date
- Freeze if Company is not Profitable or Runs into
Difficulties
14How Will The Scheme Be Implemented
- Joint Management / Union Sponsored Team
- Commitment of Senior Management
- Resource Project
- Communicate to Employees Receive Feedback
- Training
- Constant Review by Joint Monitoring Group
- Measurement System in Place
15When Will The Arrangements Be Reviewed
- Original Objectives Still Relevant
- Continuing to Meet its Stated Objectives
- All Target Areas Still Important for Organisation
- Targets Thresholds are Being Maintained at
Economic Levels