A Guide to Productivity Gainsharing

Introduction to Productivity Gainsharing

Need for Productivity Gainsharing
In today’s highly competitive environment, organisations need to manage productivity well
for survival and growth.
Employees play a critical role in productivity improvement. Establishing a structure to
reward and motivate them is part of a good productivity management system. A portion
of the wealth generated by the organisation should be distributed back to the employees
as a productivity incentive.
There are various productivity incentive schemes. Productivity gainsharing is one of them.
When successfully applied, productivity gainsharing reinforces teamwork. It also creates
an environment for sustained and continuous improvements.
This guide introduces the basics of productivity gainsharing. It presents a step-by-step
approach to designing a productivity gainsharing scheme for your organisation.

What is Productivity Gainsharing?

Productivity gainsharing is the distribution of the wealth generated as a result of productivity
improvement between the organisation and its employees.
The distribution is based on a predetermined formula, agreed upon by both the management
and employees/union. A proportion of the gains is paid out to employees in the form of
a bonus or an incentive payout. The organisation retains the remaining gains. It may use
these gains to fund future operations or share them with its shareholders and customers.

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