Using a productivity measurement model to drive gainsharing

Abstract

This research shows how a state-of-the-art, plant and firm level, productivity measurement model, the Total Factor Productivity Measurement Model (TFPMM) can be used to drive an organization's gainsharing effort. The TFPMM uses accounting data from actual operations to isolate the dollar effects on profits due to changes in productivity and price recovery. Two case study examples are used. The first case study involves a manufacturing firm and evaluates how the TFPMM can be used in that organization for gainsharing. The second case study involves a service firm and describes how that organization plans to use the TFPMM to drive its gainsharing effort.

This research also examines the role of gainsharing in the performance management process and in performance management efforts. The critical interrelationships between gainsharing and other components of an organization's management system and compensation system are explored. Various gainsharing approaches are reviewed and presented with an emphasis placed on design variables associated with a gainsharing effort. A methodology for TFPMM implementation and for gainsharing system design, development and implementation is presented and described. The research balances rigor with relevance to assist managers and practitioners with the design and development of measurement and reward systems.