Gainsharing is a process of activity where:

- the employees receive regular cash payments (these payments are made quarterly or monthly depending on how feasible it is to produce cost and financial performance figures on a monthly or quarterly basis)

• the payments come out of gains which the organisation has made through the joint efforts of managers and employees. These gains may be cost savings or improved income, or both.

• an essential feature of Gainsharing is that there are regular group meetings where employees and managers discuss how to improve performance, plan what to do, and in between meetings, they get on with it .

• Gainsharing was first introduced in the nineteen thirties, but we have improved a great deal since then. Today's Gainsharing Systems are usually multi-factor projects, where the financial payments to employees are earned by achieving improvements in specific areas (like reducing the number of bus trips that run late; reducing the volume of work that has to be done twice because of faults or errors; reducing the amount of waste material; etc.)

There are five important steps to introducing a Gainsharing system. These are

• policy
• consult
• tailor
• train
• implement

The employer must first decide on some key policy issues which are fundamental to Gainsharing. One of these concerns the level of commitment which the organisation is prepared to put into Gainsharing. It is vital that the senior executives understand what is involved and are prepared to put in the necessary resources.

Other policy decisions concern the objectives which the organisation is seeking to achieve by introducing Gainsharing; who will be included; how frequently the payments can realistically be made; and other basic features.

Once the policy issues have been considered the next stage is CONSULTATION , at all levels. There may be more senior people whose permission will be needed before Gainsharing can proceed. Certainly the organisation's own managers need to be committed to Gainsharing and they must be consulted to secure this commitment. Union representatives, who speak on behalf of the employees need to be consulted; so do the employees themselves; and not forgetting supervisory levels.

• to explain Gainsharing and make sure everyone understands what is involved
• to listen to points of view and adapt the Gainsharing system to suit this organisation
• to convince these people of the benefits of Gainsharing
• to win commitment to making a success of the project
• to plan the next stages together

It is very valuable to have an experienced consultant to make or contribute towards the presentations which start off this consultation process.

The next stage in the process is tailoring Gainsharing by designing indicators and performance improvement factors which can be measured, which the employees can contribute towards, and which will lead to better financial performance for the organisation. Here again an experienced consultant has a vital role to play in suggesting suitable indicators, advising against known pitfalls, and keeping the process on track.

Once the Gainsharing details have been designed and agreed, the success of Gainsharing then depends on adequate training for managers, supervisors, and those employees who will take part in the consultative process of improving performance.

And the final stage, of course, is the implementation and monitoring.

Holding the consultative meetings, measuring and giving feedback on performance, making sure the figures are being collected accurately, making sure the initial assumptions were valid, making the payments, monitoring to see when changes are needed to the performance indicators, and some twelve to eighteen months after introduction, it is wise to carry out a full review of Gainsharing.