Gainsharing
It should be noted that in a Gainsharing plan, the company's current performance is compared to its historic performance (baseline period). The savings above the baseline period determine the gain or loss. This is a very important point. Since gains are measured in relationship to a historical period, employees and the company must improve in order to make a gain. Performance thresholds must be corrected periodically for the effects of capital investment in new equipment as well as for the continuous improvement needed to meet ever higher customer demands.