Social media allows a proven gain sharing process to be used in a new way.
Gain sharing has been proven over its 80 year history, and it success is well researched and documented. It’s also been shown that making organisations more environmentally friendly can reduce costs, create growth, and add to profits. (We sometimes call it “profit” sharing on this site simply because people are more familiar with that idea… but it is technically a different beast).
Networks and groups working with groups on social media platforms now allow employees to play a much larger role in initiating and implementing gain sharing, and do so in a collaborative and powerful way.
Traditionally, gain sharing has usually been initiated by employers. Now, it’s much easier for employees to also initiate conversations about gain sharing, and get all relevant players involved. Some of the information or contacts on this site can help you make it happen.
To start gain sharing, consider forming a social media E-Group at work your place. The ongoing conversations and networks facilitated by social media are a key part of finding, agreeing and implementing ways to make an organisation work better… and that then provides the basis for the financial gains that are shared.
The entire online and offline conversation and process can be done in a harmonious way that is a win for all players. All so-called stakeholders in your organisation can potentially get outcomes and gains that would not be possible without the cooperation of other parties. Research shows that up to 70% of employees prefer to work with their employer in a collaborative way. Gain sharing facilitates such collaboration. Gain sharing is done in both private and public organisations.
Social Media also facilitates opportunities for employees to get savings through the “buying group” of the work place. There are many suppliers who welcome the opportunity to communicate with people at lower cost. It’s a win-win for both consumers and suppliers. Obviously, such options have to be chosen by employees, and done in a way that works for all parties. The savings that are made can substantially lower the cost of living for employees, or provide luxuries that may not otherwise be able to be afforded, or both.
If the gain sharing process is to be initiated by employees in a work place, the first step is to create a group with one of the social media platforms, as illustrated in the diagram below.
You can start a group on programs such as Facebook or LinkedIn. We can also assist you with this process if you wish. We also currently provide training programs in social media… funded by either the employer, or by groups of employees. (You don’t have to wait for management if you don’t want to, or they are not interested at this stage).
Organising your team via social media is not only a start to setting up gain sharing. It’s worth also noting that the top ranking consultants, McKinsey, predict up to 25% productivity gains just as a result of organisations adopting social media to enhance work processes. So social media can also help you find gains in productivity that you can share the proceeds from… in addition to making your job more secure (via making your organisation more effective and competitive).
The gain sharing process complements any collective agreement you may or may not have in place. It’s a separate and additional process (see further below).
Key players in gain sharing
The key players in the new gain sharing process are shown in this diagram. (The term “profit sharing” is used in our name simply because it is a more easily recognised idea).
The employees may or may not be assisted by the relevant Union, depending on the particular work site (depending of the existence of a Union in the work place, the size and history of the work place etc). Research indicates that gain sharing agreements work better with the participation of any Union that is present in the work place. But what you choose in this regard is obviously up to the employees and their Union.
The gain sharing process also may or may not be done with the help of consultants or business coaches, as chosen or otherwise by the key players such as employers and employees. If you do choose to have consultants or others assist you at any point, it’s possible to fully or partly fund the process via employee contributions. This means employees, or the whole organisation, can get additional information and advice, without waiting until the management or the organisation chooses. Again, social media groups provide new options… via the E-Group process.
There also may or may not be any “add-on” products or services provided to employees so as to provide savings to them (with or without any of the gain sharing and other processes outlined above).
What and how of gain sharing
Gain sharing is about increasing returns of both employees and management. It’s a version of profit sharing, that can’t be fudged by either side. Only the extra “profit” generated is shared. Overall, benefits include improved financial rewards to employees and employers, and more secure jobs through being more competitive, motivated, sustainable, innovative, happy and / or fair.
In essence, if output or efficiency improves from A to B (or costs are decreased), then a part of the increased revenue or efficiency gain is shared with employees in the organisation. It helps make the organisation and jobs more secure… because the increased productivity or efficiency makes the organisation more competitive or secure. The concept is used in both the private and public sector.
Gain sharing was first proposed and used by management & unions in the USA some 80 years ago, when the so-called Scanlon Plan was introduced steel factories during the 1930s. There are reports that it is now used by some20% of firms in the USA… & many in Australia. If you have a Union at your firm, it can assist with negotiation & implementation, and studies show this works well. If you don’t have a Union present, either employees or employers can talk directly about a gain sharing process.
Gain sharing can also be done as part of any Collective Agreement, if one exists or is proposed, or it can be done in addition to a Collective Agreement, at any point before, during or after the Collective Agreement process. A gain sharing agreement is a separate and different process from a Collective Agreement.
A gain sharing agreement is also good for the image of the Organisation… with employees and the community. It’s seen as a win for each of workers, the Organisation, and the community.
This site, and ProfitSharz, have information in how to facilitate, negotiate and implement a gain sharing agreement, including ways to improve productivity once you have the gain sharing process in place. Training or consulting can also be sourced though this site.
There’s also information about how to use the gain sharing concept in an organisation connected by social media, and how it can be initiated by employees or employers. In the new world of social media groups, events and communication, there is great potential to use proven concepts like gain sharing in new, exciting and rewarding ways.
At the same time that employees and management talk together to improve rewards and efficiency, they can also work out ways to reduce carbon pollution generated by any particular work place, or otherwise improve environmental sustainability. Greener workplaces can also save money, so it’s a win all round.
Three types of gain sharing
There are three main types of gain sharing systems. They are summarised by Wikipedia as below, with the first two being the most widely used.
Gain sharing is a program that returns cost savings to the employees, usually as a lump-sum bonus. It is a productivity measure, as opposed to profit-sharing which is a profitability measure. There are three major types of gain sharing:
- Scanlon plan: This program dates back to the 1930s and relies on committees to create [revenue building or] cost-saving ideas. It’s designed to lower [relative] labour costs [but not jobs] without lowering the level of a firm’s activity. The incentives are derived as a function of the ratio between …costs and the sales value of production.
- Rucker plan: …the cost-saving calculations are more complex. A ratio is calculated that expresses the value of production required for each dollar of total wage bill.
- Improshare: Improshare stands for “Improved productivity through sharing” and is a more recent plan. With this plan, a standard is developed that identifies the expected number of hours to produce something, and any savings between this standard and actual production are shared between the company and the workers.
The lump sum return to employees can be paid at any regular interval that is chosen via the agreement. Research indicates that monthly is best.
The above three systems are explained in detail information available from ProfitSharz, in the Training Workshops, or the Consultant matching service we provide. We can work with you on any part of the facilitate, negotiate, or implement process, or you can do it yourself, with or without advice from ourselves or others.
If you are an employee or employer in any organisation, and are interested in seeing a social media E-Group formed to pursue any of the gain sharing advantages discussed on this site, please get in touch. Your privacy will be respected in accordance with your wishes.
An overview of gain sharing
Here’s a quick dot point summary of what has been outlined above (with a few of the more technical words).
- Productivity is the ratio of labour and capital inputs to the value of the sales outputs of any organisation (private or public)
If: input go down relative to output, or output goes up & inputs are the same then there is a “gain” that is shared between staff and management.
Includes improvements via reduction of costs such as waste or environmental pollution and charges
- Staff only share in extra “profit” generated, based on “productivity” improvements, or gains.
- Agreed measures are put in place, & “profits” usually distributed monthly as organisations improves
- Environmental improvements can be cost neutral, saving or additional. Other productivity gain will offset such cost where necessary
- Employees always have many good ideas on how to improve any organisation, and reduced carbon pollution
- Gain sharing provides a structure for input & collaboration, so as to incentivise specific employee ideas pertinent to any particular organisation
- Employees are close to “coal face”, so they know where potential improvement are
Improvements can include:
- Process improvements
- Coaching & training in supervisors and managers
- Implementation of a so-called Social Design in the Organisation (which McKinsey’s anticipate can improve productivity by up to 25%)
- Positivity & accountability training inside a firm
- Clarity on goals at all levels of firm
- Appropriate technical change (with relevant “soft” processes)
Process involves facilitation, negotiation & implementation
- May or may not be assisted by external consultants (your choice)
- ProfitSharz provides information to all, plus a more extensive range of information by subscription
- ProfitSharz also helps employees build Employee E-Groups… so employees can initiate & fund the process in some cases (with or without employer financial contribution)
Gain sharing is in addition to normal wages, salaries and conditions such as negotiated in Collective Agreements, or specified in relevant awards. It is not a substitute for such.