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When the economy takes a tumble, many top managers take a rugged, individualist approach to the challenge, thinking that they, and only they, are qualified to lead the organization out of the economic thicket. Hush-hush meetings are followed by announcements of changes in company policy that seem to front-line personnel to have dropped from the sky.
The common result: Management is dismayed by employees' skepticism or even resistance to these changes. They're even surprised at the negative reaction when layoffs or pay cuts are announced.
Meanwhile, the employees feel that they're expected, without their consent, to shoulder the burden for the company's recovery, even though they bear little (if any) of the responsibility for the current state of affairs.
There has to be a better way. Having seen example after example of failed "rugged individualist" approaches to economic recovery, PFP has been keeping an eye out for more participatory and, dare we say, effective compensation-related means of lifting an organization out of an economic slump. Two have come to our attention of late-Scanlon plans (in their basic form, gainsharing plans) and skill-based pay. While these established members of the incentive pay family have been eclipsed by their more glamorous stock-based siblings, they deserve a fresh look, if only because of their applicability to today's trying times.
How can Scanlon plans help me? Ifyou think Scanlon Plans are only for manufacturers, think again. In the third-quarter 2002 WorldatWorkJournal (Scottsdale, Ariz.; 480-951-9191; www. workatwork.org) article, "The Impact ofthe Scanlon Plan on Retail Store Performance," the authors-- K. Dow Scott, Ph.D., of Loyola University (Chicago; e-mail: [email protected]), Jane Floyd of Information Profit Group (e-mail: jfloyd823@ yahoo.com), and Philip Benson, Ph.D. (e-mail: [email protected]) and James Bishop, Ph.D. (email: [email protected]) of New Mexico State University-make a case for Scanlon in the service sector, and beyond. As the authors announce in their introductory comments, "during the last 60 years, Scanlon plans have been successfully implemented in virtually every industry, and utilize a variety of bonus formulas."
The key to this plan's applicability in today's environment are four principles of Scanlon plan success that Scott, Floyd, Benson, and Bishop highlight. Briefly:
Principle one: Identity. Participants must know their business-and this means that employees have more than just the technical knowledge that...