Gainsharing in the Public Sector

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Gainsharing in the Public Sector

• Presented to NPELRA
• April 15, 2002
• Bruce G. Lawson, CCP
• Fox Lawson Associates LLC
• [phone]

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Strategic Compensation

• Spend dollars to achieve greatest impact
• Match productivity with results
• Stimulate creativity
• Enhance "ownership" value

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The Environment

• Compensation program(s) should be based on
• Business environment
• Organizational environment
• Employee considerations
• Market environment

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Group Based Incentives

• Group based incentives encourage employees and
  management to work together in solving problems
  of cost, quality, end efficiency leading to a
  monetary reward for documented improvements.
• Programs include- Small group
  incentives- Gainsharing/Goalsharing

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Characteristics

• Emphasis is on teamwork
• Teams are rewarded for improvement
• Gainsharing rewards () are considered "found"
  money
• Formula based
• Measures of improvement can be financial,
  operational or a combination

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Advantages

• Encourages teamwork and employee involvement
• Increases in pay are funded out of "found" money
• Supports new culture of work
• Encourages higher productivity and quality
• Lower staffing levels needed

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Drawbacks

• Plans need to be re-adjusted every few years
• Difficulty in setting measurable objectives
• Public distrust of paying for improvements
• Productivity improvement features need to be
  bought back
• Rewards may not be large enough to motivate
  change in behavior
• Significant time needed to set up

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When Will They Work

• When the culture supports teamwork
• Good base line performance measures are available
• Management and employees enjoy a level of mutual
  trust
• When all levels of employees are included
• When rewards are separate from regular pay
• The organization supports total quality
  initiatives

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When Wont They Work

• Lack of management and supervisor support
• Overly complex bonus formula
• Employee and management distrust
• Legislative meddling
• Lack of good baseline measures
• Poor communication

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The Process

• Six essential steps
• Organizational assessment
• Define desired behavior and system
  characteristics
• Final design
• Transition and training
• Evaluation and adjustment
• Further implementation

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Organizational Assessment

• Review current systems
• Assess readiness for change
• Organizational structure and culture
• Leadership and management style
• Communication practices
• Political environment
• Prior success/failure with organizational change
• Change agent skills and capabilities

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Conceptual Design

• What can and should be rewarded
• Link behavior to reward program such as skill
  based pay or gainsharing
• Assess existence of baseline measures
• Is there room for improvement
• Determine administrative requirements
• Employee participation and eligibility
• Time period for payments
• Calculate and verify gain
• Buying back productivity gains
• Impact on base pay program
• Impact on job classification
• Ongoing oversight and rules

13
Final Design

• Finalize productivity and baseline measures
  (formulas)
• Finalize administrative requirements including
  Oversight
• Conduct test
• Outside/Independent review
• Academic/technical specialists
• Political leaders
• Business leaders
• Labor leaders

14
Transition and Training

• Establish communication strategies
• Conduct training

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Evaluation Adjustment

• Assess test
• Make changes as needed
• Begin implementation

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Case Study

• Baltimore County, Maryland
• Tony Sharbaugh. Director of Personnel