gain sharing analysis

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Case study-
Chapter 5: Gain Sharing at CircleWorks
CircleWorks has been making custom bicycles for biking enthusiasts for nearly fifty
years. The family-run company has had much success using small teams of employees to build
bicycles to meet customer specifications. The custom built bikes have been in consistent
demand and CircleWorks has maintained their position as a leader in the market. But, as a new
generation of bike builders enters the workforce, Human Resources Director Sheila Gaines is
concerned about employee motivation. She is considering offering incentives to encourage
better teamwork, more employee involvement and improved productivity.
Introducing incentive pay is a challenge at CircleWorks as it runs contrary to the
organizational culture. The family who started the company believed strongly in hard work and
traditional management practices and this view dominates the organizational culture. The
company President has suggested to Sheila that employees should be motivated only by the
satisfaction of getting the job done. Further, company management is somewhat resistant to
employee involvement in decisions. While they have always had a suggestion box available,
very rarely does management look to employees for input on operations. Advancing technology
has allowed many changes in production techniques and management believes that the design
engineers are in the best position to guide changes in the work processes.
The bikes are built using teams of four to five workers who follow specific directions on
building each bike. Because the bike designs are fairly intricate, each bike takes a designated
amount of time to build and there is not much variability in the speed of production. However,
Sheila has noted that some teams do work together better than others and wants to reward such
cooperation. She has considered productivity bonuses awarded to the teams, but has also
considered implementing a gain sharing plan. Sheila believes that some incentives directed at all
employees as opposed to the individual teams may promote more cooperation overall within the
company. Further, as new workers with varied talents enter their workforce, Sheila wants to
provide some incentives for the employees to make improvements to the production process. As
she prepares to meet with the company President, she must decide if a gain sharing plan is the
best recommendation.

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