Home HR Glossary Gainsharing
Compensation

Gainsharing

A group incentive scheme sharing productivity or cost savings with employees.

Full Definition

Gainsharing is a group incentive compensation programme in which employees share in the financial benefits of improvements in organizational productivity, quality, or cost reduction. Unlike profit sharing (which distributes a portion of overall profit), gainsharing is tied directly to measurable operational improvements that employees can influence. Popular gainsharing models include Scanlon Plan, Rucker Plan, and Improshare. Gainsharing promotes teamwork, employee involvement, and alignment between effort and reward.

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