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gainsharinga 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.