What is gainsharing?

Gainsharing is a management approach that links employee compensation to improvements in productivity, efficiency, or profitability within a company. The basic concept of gainsharing is that employees receive a portion of the gains they help create through their work. This type of incentive is designed to improve employee morale, create shared goals and objectives, encourage collaboration, and drive innovation. Gainsharing programs typically involve setting specific production or performance targets and rewarding employees based on their ability to achieve those targets. These rewards can include a cash bonus, stock options, or other forms of compensation. Gainsharing is often used in manufacturing, service industries, and government agencies where measurable performance improvements are critical to success.