Gain Sharing :: GCSE Business Marketing Coursework

top SharingEmployers are often faced with the ch every last(predicate)enge of looking for ways to boost productiveness and profitability while at the same time, motivating employees to accomplish organisational goals. For many employers, variable pay plans have risen to meet this challenge. A variable pay plan ties pay increases to increased performance and productivity. unrivalled of the more popular group variable pay plans is called fool share. below light up share-out pay programs, both the employer and the employee benefit from increased productivity. Therefore, gain sharing has often been referred to as a win-win pay program since it is an inducing strategy that ties pay to productivity. Gain sharing is a type of inducing plan designed to increase productivity by linking pay nowadays to specific improvements in a companys performance. Gain sharing is used primarily when quantitative levels of production are definitive measures of blood success. Gains are shared with unit/department employees on a monthly, quarterly, biennial or annual basis according to some predetermined principle calculated on the appreciate of gains of production over labor and separate be. The plan lets employees reap some of the rewards of their efforts through teamwork and cooperation and by working smarter and harder.Gain sharing plans offer the following Directly ties pay to some important measure of company performance Results in productivity improvements when installed Appropriate for all groups of employees Improves communications and teamwork among employees Increases employee awareness of the big picture Improves job satisfaction and employee dealing Increases employee participation through involvement in the systemGain sharing pay programs have the following disadvantages Time consuming to design, implement and address Requires employee orientation, education and training Accurate and timely production and cost entropy mustiness be available If not alread y in place, gain sharing requires a shift to participative management and employee involvementOnce you limit to add a gain sharing plan to your company you must pick the type of plan you wish to implement into your company. The following is a description of different types of plans a company could implement. A Value Added programme is the cost of materials and services is subtracted from sales to determine a value added figure. Employee costs are then compared to this figure to arrive at a value added index. This index is compared to value added for future periods to determine if there has been an improvement in productivity. To the extent that employee costs are less than would be the case by applying a value added index to a value added, there is a productivity gain to be shared.