3 3 9

proaches to incentive plans are used at the organizationwide level: suggestion

systems, company group incentive plans (gainsharing), and profit sharing.
Essential elements for a successful suggestion. system include:
Management commitment.
Clear goals.
Designated administrator.
Structured award system.
Regular publicity.
Immediate response to each suggestion.38
The National Association of Suggestion system suggests that a firm should
investigate what competitors are doing and talk to employees to find out what
will motivate them. In the past decade, many companies dropped cash awards and
moved toward recognition and other awards, such as company stock. There is
also movement away from individually based suggestion systems to a team
approach such as the one adopted at Hallmark.
Gainsharing incentive plans Gainsharing plans are companywide-group incentive
plans that, through a financial formula for distributing organizationwide
gains, unite diverse organizational elements in the common pursuit of improved
organizational effectiveness.4 These systems share the benefits of improved
productivity, reduced costs, or improved quality in the form of cash bonuses.
Common elements of these programshours worked, dollars spent on labor, and
dollars spent on wasteserve as reliable standards of performance; programs
are built on a standard of how many hours are required to produce a given
level of output. Gainsharing incentive systems have proved exceptionally
effective in enhancing organizarionwide teamwork in thousands of manufacturing

and service organizations. Exhibit 113 lists characteristics associated with

successful gainsharing plans. The gainsharing system is intended to improve overall
organizational performance by allowing employees who contribute to performance
results to share in the proceeds.