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Three Biggest Mistakes People Make Implementing Gainsharing

(1) Not Being Specific on How to Drive the Gains

Without focus, without specific action plans, your improvement efforts will fizzle and die.

Managers might try to motivate people by saying something like "If we have a five percent productivity improvement this month, then we will have a shot a bonus. We have the work, the materials, the people, so let's go make it happen!"

But exactly how are we going to drive the gains? We can't improve in general. We can only improve by making specific changes.

We've got to be specific in terms of the problems, and who is going to what, by when to fix them.

For example, a manager might show the efficiencies in an area and discuss how we need to improve them. They ask, "What should we do to improve these numbers?" But they don't breakdown the gap between where they are and where they need to be.

Let's say, (for example) that we have 65% efficiency, which means we have 16 hours of lost time. Three hours might come from set-ups taking longer than planned. So what specifically are we going to do to reduce set-up time? Who is going to do what, by when? How will we check to see that the fix(s) worked?

Wimpy analysis & plan gives wimpy results
And where does the other time go? What should we do to find out where the time is going? How do we divide up the time once we get data to answer this question and put action plans in place to address these issues? How are we going to follow up and see if the fixes worked?

We have to define what "good" looks like. Then aggressively go after achieving it. If we're not specific about where we want to be, we can't aggressively attack the gap between here and there.

"If you don't know where you're going, you'll end up somewhere else."
~ Yogi Berra

(2) Bonuses Don't Track with Profits

THE MOST IMPORTANT ISSUE in designing a Gainsharing Formula is that profits track with bonuses. The Gainsharing results should mirror and predict financial performance.

That is, if we are not "in the hunt" for a bonus, based on the Gainsharing information, we probably will not have the financial results we want either.

It's essential for Gainsharing to be self-funding, but also for the Gainsharing information to have the appropriate urgency. If we're not on track to get a bonus, it's not an issue of "well, we'll see how things turn out in the next Gainsharing period."

Gainsharing results are like the information from the instruments in an airplane. If you are losing altitude, that has it's own urgency!

Similarly, the Gainsharing results tell us how we are doing operationally and financially. They track with results that are imperative beyond Gainsharing.

(3) Time Frame is Too Long

Psychology has proven that the closer the link between an action and a reward, the greater the influence on future behavior.
This is a consistent, predictable "law" of nature, like the "law" of gravity. If a reward is delayed, the impact is diminished or lost.

More than 90% of Gainsharing Systems are set up on monthly periods.

Quarterly Gainsharing periods stretch the link between performance and rewards, and make it much more difficult to maintain positive momentum.

It's not that quarterly periods can't work. They just make things more difficult, reduce motivation, and the likelihood of success.

Usually, the desire to have a longer Gainsharing period comes from the fear that the Gainsharing performance (or bonuses) don't track with profits. So if that part of the formula design is handled correctly, the need for longer Gainsharing periods goes away.


Whenever you’re ready . . . here are six ways we can help you:

1. Gainsharing Executive Briefing DVD
This free DVD gives a quick primer on Gainsharing and its “must have” features. It was created by a television producer and includes on-site interviews with actual Gainsharing users. Click here to request your free copy.

2. Gainsharing BluePrint
Answers the question “How could this be applied in my Company?” Outlines both the formula and “Boots on the Ground” connection fundamentals required for an effective Gainsharing system. Click here to request more info.

3. “40 Minutes to a 5 to 15% Productivity Improvement” Webinar
Learn how to motivate employees and give them “skin in the game” to drive results. Click here for direct access.

4. Invite me to speak for your group or trade organization
I would be pleased to serve your trade organization or other groups as a speaker. Click here to email me about your opportunity.

5. In-person, on-site presentation at your company
Let’s put a presentation together for your Management Team and others. It’s an ideal way to explore how Gainsharing applies to your specific circumstances without the cost or inconvenience of travel for your people. Click here to email me to discuss customizing the presentation for your Company.

6. Webinar for your company
We can also develop a custom webinar presentation for your company. This makes it easy to get a quick overview using technology to maximize convenience. Click here to email me to request more info.

You can also send your questions to or call 317-371-1021.

About the Author:

Dr. Charles (Chuck) DeBettignies is an author, speaker, seminar leader, Gainsharing expert, and founder of Gainsharing Inc.

His company implements Gainsharing processes to motivate employees to pursue great performance with a performance-based pay reward system that leads to an improved bottom-line at the same time.

Many companies say it's the single best thing they ever implemented for both their company and employees.

Gainsharing Inc. specializes in Gainsharing Systems, and offers design, implementation, and assistance to drive impressive, lasting success.

Gainsharing Inc.
P.O. Box 501548
Indianapolis, IN 46250

© 1997-2017 Gainsharing Inc. All rights reserved.

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