Because this pay is only implemented when gains are achieved, gainsharing plans do not adversely affect company costs. Increases in production with equal or less effort. Equal levels of production with less effort. Advantages Helps companies achieve sustained increases in productivity. Employees become more involved the productivity gains made by the employer.
Employees can share in the benefits of employee sponsored improvements.
Enhances commitment to organizational goals. To overcome this limitation, employers may restrict this type of compensation to exempt employees. The formulas and program may be difficult to understand. Requires a shift to a more team oriented management style. Works best when company performance levels can be easily quantified.