GreenSearch Paying: 'We'd Like to Pay You More, but We Just Can't Afford It'

What's wrong here? Sadly, many green industry owners view wages as a fixed cost. When it comes time to reduce these costs, the usual methods are reduction of overtime, wage freezes and staff reductions. Clearly, in most cases, these actions are the only alternatives an employer has to control the growth of wages. While these approaches may have short-term results, the impact on employee commitment, morale and loyalty is very detrimental. Companies that rely on "fixed pay" compensation plans have very few alternatives when their business or the economy takes a dip.

Some companies are trying to take some innovative steps to tie their compensation practices more closely to their business needs. These companies have come to the realization that properly designed and implemented rewards systems can influence their employees' behavior. All salaried workforces, knowledge- and skill-based pay, along with variable lump sum bonuses, have each taken their turn at reducing the annuity aspects of the annual pay increase. But there is an even more effective approach to aligning employee reward systems to the performance of their companies. It's called gainsharing.

Gainsharing has several unique characteristics that make it an ideal practice for many companies to consider adopting:

• Gainsharing is a group incentive that values the results a team can produce rather than those of an individual performer.



• It encourages employees to learn more about those factors that make their company a success since the payouts of this plan are calculated by a predetermined formula and pay out process. It works very well in organizations in which there is a strong bond of trust between management and employees.



• The proceeds generated from a gainsharing plan are self-funding. If there are no company gains, then there is no payout. This type of arrangement precludes an adverse effect on a company's cost structure, unlike most traditional pay plans.



• Payouts from a gainsharing plan are paid on a frequent and current basis. This feature enables employees to regularly reap the rewards of their efforts.



• Gainsharing works best in companies in which there is an environment that fosters a participative relationship between management and employees. Autocratic, "top down" driven organizations are not good candidates for this type of plan.

This type of compensation plan is not new. In 1987, the American Productivity and Quality Center along with the American Compensation Association (now called WorldatWork) conducted a survey that indicated that 73 percent of the gainsharing plans in effect at that time had been installed within the last five years. It is clear that many companies have taken steps to align their rewards systems to support the needs of their business. They recognize that one of the most important potential benefits to be derived from a plan like gainsharing is that it helps make all employees partners in the business and, in doing so, allows them an opportunity to share in the rewards of their contributions.

What about your company?

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