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Back to Hourly Employee Incentive Plan Overview
Simplified GainSharing Program Overview
 Simplified GainSharing is an hourly employee productivity improvement program based on sliding scale financial incentives with no caps. The program is designed to be easy to implement and maintain in any warehouse, distribution center, call center, or other hourly work group. Simplified GainSharing has now been installed in nineteen distribution centers, and taken together, our clients are exceeding annual savings of $5,500 per participating Full Time Employee on average.
Our program can be installed in your center right now, at no risk and no up-front cost to you. We have experienced such success with our past clients that we will defer our consulting fees until you see your profits rise, and then our fees are paid only as a percentage of your net. See our Consulting section for more details.
How Sliding Scales No Caps Affects Gainshare Employee Productivity
When a job can be measured using individual gainshare employee productivity standards, tell the employee that if they average 10% above normal productivity levels for one month, then the next month you will add 25 cents to their hourly wage for the next month’s pay. To continue, tell them if they average 15% above then you will add 50 cents to their hourly rate for the following month. Or 75 cents for a 20% increase in average employee productivity. The best thing is that there are no caps, so the more above they want to work, the more they will get paid. That’s a BIG incentive for almost any worker.
But where do your profits materialize? You’re paying the gainshare employees more, so how does this percentage out for you. Let’s take a look. A Simplified Gainshare employee productivity program utilizes a one-third/two-thirds split. For the sake of easy math, we’ll look at a $10 an hour employee. At 10% above standard productivity performance, they’re worth $11.00 to you. If your benefits average 30% of labor costs, a 10% employee productivity gain is really worth $11.30 to the company. So for the $1.30 increase on the first 10% gain, you’ll pay the employee 25 cents, and the company profits $1.05. The employee gets 19.2% of the gain and the company gets 80.8%.
For the next gainshare level, at 15% above standard employee productivity, you pay 50 cents per hour more than the regular wage. The savings is $1.95 and the company makes $1.45 as a result. The employee ends up with 25.6% of the gain and the company gets 74.4%.
One additional point to appreciate is that when using a stepped scale such as this employee productivity gainshare plan, each benefit increase is only paid when the next full step is met. All value between the steps accrues to the company at no extra cost. In other words, if an employee increases their productivity only 14% rather than the 15% needed to obtain the next gainshare level, the company only pays for the productivity at the 10% level.
Traditional productivity improvement gainsharing programs require a team effort. But what happens most of the time in that situation is that the least efficient workers don’t improve (or at least not very much) because they know that the hard working go-getters will work hard enough for both. The other side of that is that the hard working go-getters don’t improve because they don’t want to work harder for another worker's benefit. This psychology pulls the whole program down. Our productivity improvement program puts the incentive to work harder and more efficiently in the hands of each individual, and it works, because everyone wants that bigger paycheck that they alone can earn for themselves. They control how much they earn, and are willing to work harder and more efficiently to get it.
The basic concepts of our Simplified GainSharing productivity improvement program are that individual incentives are more powerful than team incentives and will harness employee motivation. The incentives peform best when paid as an earned hourly wage rather than a lump sum bonus, and productivity improvement gainshares should be paid as soon as possible after the improved performance to complete the motivation-work-reward cycle. We recommend a scale based on one month's performance increase equaling the following month's wage increase.
We discuss all of these productivity improvement elements in detail in our book, Workforce Productivity, which sets a goal of doubling distribution center productivity (a goal we’ve achieved repeatedly in the past), by discussing three main categories of endeavor.
One – Simplified GainSharingHow boredom impacts a distribution center’s (DC’s) workforce, the evolution of Profit Sharing & GainSharing (and the drawbacks of both), and why a "plug & play" program is necessary for DC Managers who have some aversion to HR incentive plans are discussed in detail. We show the reasoning behind each of the elements of Simplified GainSharing and how to implement a program. We also discuss the necessity of establishing a Corporate Sponsor, using Simplified GainSharing to improve Quality, the use of free time, how to implement a plan in union facilities, & how to perform both Buyouts & Audacious Buyouts to adjust metrics & further improve productivity.
Two – Managerial BehaviorsThis section discusses how Corporate should monitor the increase of distribution center productivity, and also looks at the tendency of some facility managers to spend the saved labor hours generated by Simplified GainSharing. In addition, it discusses a salaried bonus plan based on the same principles used for hourly gainshares. It ends with a discussion of the attributes of best managers under the Simplified GainSharing program, & how the plan can be used to achieve Audacious Goals.
Three – Fantasy WorkforceThe ultimate goal of the Simplified GainSharing program is to take an average workforce & 'collapse' it into one composed of only the best workers. With Simplified GainSharing, this can readily be achieved over a sustained period of participation. The technique we use is called Fantasy Workforce, or an advanced form of Mentoring. When combined with Buyouts & Brainstorming, the use of this component of Simplified GainSharing can eliminate the mediocre & average employees, turning the remaining group into top flight workers or ‘banshees’ as we call them. Banshees are employees who work at a screaming pace.
AppendicesIncluded at the end of the book are generic sample documents for a Simplified GainSharing installation. These include: Metrics & Baselines, a sample Simplified GainSharing Plan document, the Supervisors' Checklist, a Gainshare to Free Time poster, the Mentoring Plan doc, Brainstorming Techniques & the Characteristics of a Corporate Sponsor.
With the Simplified Gainsharing productivity improvement program:
Work force motivation & morale improve
Quality of work life & job satisfaction increases
The number of program participants above “0” or “100%” grows
The portion of the work force participating in the program is larger than traditional team-based incentive efforts
Work quality rises
Turnover falls
Safety improves
Supervisors have more time to manage people
Tracking Mechanisms & Training Materials are included
With our no cost – no risk installation, you have nothing to lose and millions to gain. Let us know if you're ready to begin, or have more questions.
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