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2-2 Case Study Gain Sharing at CircleWorks Laura Bates 1/17/2021

CircleWorks is a successful family owned custom bike company, which organizes employees into teams in order to build custom ordered bikes for customers. In order to continue in building custom bikes in a timely fashion to be able to maintain top position in the market, the company has to look at employee satisfaction and compensation. While this company has always had a traditional view on management, companies have to look at changing in moderation in order to stay current or ahead of competition. Changing the culture of an organization is hard; however, can push the company forward with retaining highly talented staff and motivating that staff to work to their highest capability to benefit the company. Currently CircleWorks uses teams of four or five workers to build the custom ordered bikes and noted these bikes are intricate and take time to build. However, some groups’ teamwork is melding better than others, completing custom bikes more efficiently. Introducing productivity bonuses for employees, although a nice gesture would only reward teams that are already working conjointly and may not motivate the other teams to do the same. As a top competitor in this market, CircleWorks can introduce a gain sharing plan to employees to motivate top notch work out of all of their teams. “Gain sharing is program that rewards a company’s workers for increased production, improved quality, cost reductions, and other achievements through the payment of regular cash bonuses” (Goldman, 2016).This type of system allows employees to improve their work ethic, along with making financial bonuses, when the company profits. “When business is soft, bonuses would be reduced or eliminated, but when conditions are good, the workforce shares in company’s gains” (Davis, 2015). There are three types of gain sharing programs, which include the Scanlon plan, the Rucker plan, and Improshare. CircleWorks would benefit the most by implementing an Improshare gain sharing plan into the company.”Improshare was created by industrial engineer

Mitchell Fein and stands for improved productivity through sharing” (Pay for team performance, n/d). Improshare is about quality and not quantity, and improving overall team times and communication between all employees. “Gain sharing frees employees to determine how to improve their own and their group’s performance” (Pay for team performance, n/d). Motivating employee to improve their own and group performance can benefit the company in aspects of customer satisfaction, and employee retention and satisfaction. Introducing any type of gain sharing incentive would involve setting up easy to understand terms for employees to follow. The Improshare incentive is the easiest to understand and employees control the result. “Improshare measures changes in the relationship between outputs and the time (input) required to produce them. This plan is minimally affected by changes in sales volume, technology, and capital equipment, product mix or price and wage increases” (Recardo & Pricone, n/d). In the case of CircleWorks, if bike builders produce the monthly order of custom bikes more efficiently by improving their and their teams’ work ethic, than the normal rate employee would receive bonuses. The Improshare plan allows all employees (excluding management) to be eligible for gain share bonuses. “Both production (direct) employees and non production (indirect) employees are included in determination of the bonus” (Pay for team performance, n/d). It is important to extend motivation and appreciation to support and indirect employees that still play a part in the performance of direct employee’s production. Bonuses should be rewarded to employees in a separate pay check from their weekly/bi-weekly paycheck. CircleWorks can benefit from implementing an Improshare gain sharing plan into the company’s policies. This type of plan can improve employee satisfaction, work ethic and employee retention. “Gain sharing plans work best when applied to work environments that

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involve teamwork and collaboration, in addition to aligning employees with organizational goals” (Masternak, n/d). This type of incentive can separate CircleWorks from competitors in the market, making it harder for competition to compete for talented workers in the field. All of these objectives corresponds with keeping CircleWorks at the top of the custom bikes building market.

References: Davis, K., 2015. How Gain Sharing Can Benefit Companies & Employees . [online] Dougfreemancpa.com. Available at: <https://www.dougfreemancpa.com/newsletters/KDNews- 05-06.2015.pdf> [Accessed 16 January 2021]. Goldman, J. I. (2016, November 23). How Gainsharing can benefit companies & employees. Retrieved January 14, 2021, from https://goldmanandcompanycpa.com/how-gainsharing- can-benefit-companies-employees/ Masternak, R. L. (n.d.). Compensation: Incentive Plans: Gainsharing. Retrieved January 14, 2021, from https://hr-guide.com/Compensation/Gainsharing.htm Pay For Team Performance. (n.d.). Retrieved January 16, 2021, from http://www.whatishumanresource.com/pay-for-team-performance Recardo, R. J., & Pricone, D. (n.d.). Is Gainsharing for you? Retrieved January 15, 2021, from https://www.qualitydigest.com/jul/gainshre.html

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