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George Tuthill

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Senior Business Development Manager. Computershare Investor Services (Ireland) Limited. Executive Member Irish ProShare Association. george.tuthill_at_computershare.ie ... – PowerPoint PPT presentation

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Title: George Tuthill


1
Bucharest Conference Gain Sharing
  • George Tuthill
  • Senior Business Development Manager
  • Computershare Investor Services (Ireland) Limited
  • Executive Member Irish ProShare Association
  • george.tuthill_at_computershare.ie

2
INTRODUCTION
  • What is Gainsharing
  • Objectives for Gainsharing
  • Potential Advantages of Gainsharing
  • Potential Disadvantages of Gainsharing
  • Some Problems with Gainsharing
  • Key Steps in Introducing Gainsharing

3
What 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

4
Objectives 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

5
Potential 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

6
Potential 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

7
Some 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

8
Some 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

9
Key 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

10
Who Will Participate?
  • Team-Based
  • Departmental
  • Organisation Wide
  • Minimum Service
  • Absent / Special Leave (Pro-Rata Payment)

11
What Performance Measures Will Be Used
  • Quality
  • On-time Delivery
  • Sales
  • Waste
  • Machine Down Time
  • Absenteeism
  • Overtime Reduction
  • Labour Productivity
  • Labour Costs

12
Against 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

13
How 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

14
How 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

15
When 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
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