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Definition: GainSharing

GainSharing is a concept where employees are given a certain share of profits when a company performs well. This capital gain given to the employees is given as an additional component apart from the salary or wages.

For example, a company has Rs X of profits. The company rule states that gainsharing will be s(X). So the agent will be getting s(X) and the principal will be getting X-s(X).




Drives performance of an organization by promoting awareness, alignment, togetherness, involvement in activities and openness.


The plan commonly applies to a single site, center, or stand-alone organization.


Payout is based on operational measures which improves the view in terms of what employees do and how they are compensated.


Gains are based on the increased performance and they are funded by the company itself


Payments are made only when the performance has improved drastically.


All employees at a site are eligible for gainsharing.


Payment is often monthly or quarterly. Many companies have a year-end reserve fund to account for deficit times.

Form of Payment

Payout is cash rather than indirect compensation. Many organizations to increase their visibility pay the bonus through a cheque.


All employees receive the same percentage of bonus.


A supporting employee involvement and communication system is an integral element of Gainsharing and helps drive improvement initiatives

Hence, this concludes the definition of GainSharing along with its overview.

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