Concept of Gain-sharing | Main Features of Gain Sharing | Benefits of Gain Sharing

Gain sharing are a formula-based company or factory wide bonus plan, which provides for employees to share in the financial gains made by a company as a result of its improved performance.

The formula determines the share by reference to a performance indicator such as added value or another measure of productivity. In some schemes, the formula also incorporates performance measure relating to quality, customer service, and delivery or cost reduction.

Gain sharing differs from profit sharing in that the later is based on more than improved productivity. A number of factors outside the individual employees control, such as depreciation procedure, bad debt expenses, taxation and economic changes, contribute to profit. Gain sharing aims to relate its payouts more specifically to productivity and performance improvements within the control of employees. Fundamentally the aim of gain sharing is to improve organizational performance by creating a motivated and committed work force who wants to be part of a successful company.

More specifically, the aims of gain sharing are to:

• Establish and communicate clear performance and productivity targets. Encourage more objective and effective means of measuring organizational or factory performance.
• Increase focus on performance improvements in the area of productions, quality, costumes service, delivery and costs.
• Encourage employees to participate with managements in the improvement of operating methods.
• Share a significant proportion of performance gain with the employees who have collectively contributed to improvements.

Main features of gain sharing are as following:

1. Ownership: The success of a gain sharing plan depends on creating a feeling of ownership that first applies to the plan and then extends to the operation. 
2. Involvement: The involvement aspect of gain sharing means that the information generated on company results is used as basis for giving employees the opportunity to make suggestions on ways to improve performance and by empowering them to make decisions concerning this implication.
3. Communications: Gain sharing plans all always based on key performance measures such as added value. The company has therefore to ensure that everyone involved knows exactly what are happening in these performances areas. Why it is happening and what can be done about it.
4. Formula: The traditional forms of gain sharing are the station plan (measures employment costs as a proportion of total sales) the Ruckus plan (similar but a proportion of sales use the costs of materials and supplies) and impression can establish standard). There all however may be variations on these plans based on added value and other performance measure. There is no such thing as a standard formula - there is at all plenty of choices.

Benefits of Gain Sharing:

The potential benefits of gain sharing are that it:

• Forces the attention of all employees on the key issues affecting performance. 
• Enlists the support of all employees to proposals, poor improving performance, not just a selected group.
• Supports programmes for empowering employees – decision taking can be pushed down the organization hierarchy and employees can be given more control over their work.
• Engage team work and cooperation’s at all levels.
• Promote better communication about issues concerning work and productivity.
• Encourages trust between employees and the company.
• Creates a win - win environment in which everyone gains as productivity rises.

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• Concept of Performance Evaluation

• Methods of Performance Evaluation

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Organizational Outcomes of HRM System

Organizational Outcomes of HRM System

The organizational outcomes of HRM are:

1. Quality of work life (QWL): Quality of work life refers to the quality of relationships between employees and total working environment of the organization. It is concerned with overall climate of work for better quality of work life. There are two ways of looking at what QWL means. One way equates QWL with a set of objective organizational conditions and practices (e.g. job enrichment, democratic supervision, employee involvement, and safe working conditions). The other way equates QWL with employee’s perceptions that they are safe, relatively well satisfied, and able to grow and develop as human beings. This way relates QWL to the degree to which the full range of human needs is met.
2. Productivity: Productivity is a measure of the output of goods and services relative to the input labor, material and equipment. The more costs are lower. Improving productivity simply means getting more out of what is put in. it does not mean production through the addition of resources, such as time, money, material or people. It is doing better with what we have improving productivity is not working harder; it is working smarter. Today’s world demands that we do more with less-fewer people, less money, less time, less space and fewer resources in general. Some of the increase in manufacturing productivity is undoubtedly due to wide spread automation in the factory.
3. Readiness for change: Change is quite complex process. Change is a fact of life. It is a nature of human being that nobody instantly becomes ready for the change. Employee tends to resist change. The main reasons for such resistance are

• Fear of unknown: Change may bring uncertainty creates problems. Employee like old ways and fear uncertainty.
• Security: Employee may fear threat to job security.
• Habit: Employee resists to change due to old habit.
• Misunderstanding: Employee may not understand the purpose of change by management. 
• Social factors: Employees may feel threat to existing social relationships.

Output Components of HRM

If there are good HRM systems in any organization, it will give the following employee related output. It consists of 4cs.

1. Commitment: If there is good HR System in organization, organizational outcomes will be high commitment of staff. Employee will be more committed. Employee will be loyal, performance oriented, self worth, and involved in work. They show their potentialities with highest degree for the achievement of organizational goal. They will automatically more motivated towards their duty and always think about the interest of organization.
2. Competences: When there is good HRM system, management can attract and keep people for long time. Finding out their weakness, training can be given to them. With training and imposition new skill, employee can be made competent, that can response to any changes inside and outside the organization high competence to adapt to changes in the environment and assumes new roles; potential for higher-level job. Competency of people can be increased through training and development and organization can proceed into a competitive market.
3. Cost effectiveness: Cost effectiveness does not signify reducing the cost but managing the cost in a most effective way sot that output can be maximized. This can be done by effective HRM system. With good HR decision in HR activities such as recruitment, selection, training and development, performance appraisal, labor turnover can be reduced, efficiency of labor can be increased, this ultimately affects in well management in cost.
4. Congruence: Congruence is the relationship between the interest of employee and organization. Good HR system sustains the relation between management and employee; high degree of harmony between the goals of individual and the organization; common vision in goals and working together to attain them.