HRM 3490 Lecture Notes - Lecture 11: Profit Sharing, High Tech, Capital Intensity
Document Summary
11 designing performance pay and indirect pay plans. Cost savings can be brought about in a variety of ways, such as through improved quality, decreased waste, improved methods of working, and increased output per unit of labour. Types of gain-sharing plans: the scanlon plan. Defined as: a gain sharing plan that creates mechanisms for employee participation in developing productivity improvements and that shares the financial benefits of those improvements with the employee group that generated them. Was developed by joseph scanlon, a usw local president. In a scanlon plan the organization first computes a normal labour cost, based on past experience and express as a percentage of the sales value of production. If workers lower this cost to 47%, they share this productivity gain (3% of sales value) with the company according to the prearranged formula. Much more like a financial incentive plan.