ires a shift to participative management and employee involvementOnce you decide to add a gain sharing plan to your company you must pick the type of plan you wish to implement into your company. The following is a description of different types of plans a company could implement. A Value Added Plan is the cost of materials and services is subtracted from sales to determine a value added figure. Employee costs are then compared to this figure to arrive at a value added index. This index is compared to value added for future periods to determine if there has been an improvement in productivity. To the extent that employee costs are less than would be the case by applying a value added index to a value added, there is a productivity gain to be shared. A major challenge with this type of plan is removing the effects of automation from productivity gains. The Rucker Plan, essentially, this is a value added plan that contains special adjustments to account for base wage and other price changes, capital expenditures, and other costs unrelated to employee productivity. The Scanlon Plan is one of the more familiar gain sharing plans. It involves calculating total payroll costs and dividing by sales plus finished inventory figures to determine a plan ratio. Employee shares of productivity gains are determined by improvements of this ratio. The Improshare plan tells that increased productivity is determined by looking at the number of working hours that are saved in producing a number of finished units in a given period of time as compared to a base period. Its proponents stress that this measure leads to less waste and better quality control since only finished products are used in measuring the gains. The next is the Par Plan. This plan goes beyond other gain sharing plans by rewarding any successful effort to improve productivity. It does not single out gains solely from a productivity improvement standpoint. A "par" figure is determined based...
