gainsharing


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gainsharing

a PAY system where a proportion of employees' pay is linked to gains in productivity or reductions in costs. Its benefits are thought to include greater acceptance of changes in technology and work methods, more information sharing, more effective teamwork and greater personal effort. It can be used in organizations where profit-sharing schemes are inappropriate or impossible e.g. not-for-profit and public service organizations.

Two common forms of gainsharing are the Scanlon Plan where a portion of wages is based on movements in the ratio of the total wages bill to the total value of sales, and the Rucker Plan where wages are related to movements in the ratio of the total wages bill to total VALUE ADDED. The former provides an incentive to maximize saleable output whilst the latter encourages cost reduction.

References in periodicals archive ?
148) Unlike with the employment exception, the personal services exception often is not applied in situations where hospitals can bundle the physician's base salary and the incentive-based compensation received from a gainsharing arrangement together to perform a fair market value analysis.
The theory behind gainsharing is to align the payment incentives of the physicians with the hospital.
id=7575 (NJ Hospital Ass'n spearheaded efforts to win waiver from CMS to test a gainsharing initiative, aimed at reducing health-care costs while maintaining quality of care).
All You Ever Wanted to Know About Gainsharing But Were Afraid to Ask," Target, Association for Manufacturing Excellence, How to Cast Out Foreign Competition, June 1998
The common result of most Gainsharing programs, says a General Accounting Office report, is often a 22 percent decrease in waste, spoilage, and customer returns; a consistent boost in productivity; and a 17 percent increase in net profit for the year.
Spurred on by gainsharing, the entire organization evolves naturally into a customer-focused, profit-oriented operation.
Given this sudden popularity, it is surprising that only a small number of studies have examined gainsharing in field settings (e.
Extends the existing Gainsharing Demonstration Project through 2014.
McCarty Thornton said during an audioconference on gainsharing sponsored by the Integrated Healthcare Association.
And MedPAC commissioners are weighing whether to allow the Department of Health and Human Services to regulate gainsharing arrangements between physicians and hospitals.
Gainsharing offers these employees the opportunity to get something in return for that increased improvement.