Evaluating the effectiveness of a gainsharing programme for labour productivity improvement

Orientation: Companies are faced with the challenge of promoting innovation for productivity improvement among employees. They create a work environment that promotes worker participation for productivity improvement. This sentiment underpins the concept of gainsharing.Purpose: This study evaluated the effectiveness of a gainsharing programme for productivity improvement in automotive parts manufacturing companies in South Africa (SA).Motivation for the study: SA’s labour productivity, in the manufacturing sector, is low when compared with Korea, the United States of America, Taiwan, Japan, France and the United Kingdom. Hence, this study focused on gainsharing, given the low labour productivity levels in the South African manufacturing industries.Research design, approach and method: The two automotive parts manufacturing companies that have adopted a gainsharing strategy participated in the study. A third automotive parts manufacturing company that has adopted the 360-degree performance appraisal system was included for comparative purposes. These companies operated in the eThekwini District Municipality in KwaZulu-Natal. Study objectives were achieved by collecting pre- and post-quarterly data for spoilage, absenteeism, capital investment and labour productivity.Main findings: Results established that gainsharing improves productivity and reduces spoilage and absenteeism rates.Managerial implication: The South African companies are encouraged to revise their reward philosophies and develop strategies, policies and practices that help achieve productivity goals and support organisational change.Contribution: Gainsharing is a desirable alternative as it contributes to raising the competence levels and productivity improvement of an organisation. As a comparison, the 360-degree performance appraisal does not have an impact on labour productivity.