Gainsharing Programs

Written by Patricia Skinner
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More and more companies are introducing gainsharing programs to entice the kind of essential employees they need and keep them. A gainsharing program is any kind of scheme for sharing company profits with employees. To an employee, it basically means getting money from a company in ways other than through a paycheck.

Gainsharing programs can take many forms. Employers can call it profit sharing, employee ownership plans (ESOP) and stock option plans among others. What these programs are doing, essentially, is giving employees the option of buying into the company they work for. This encourages greater loyalty and commitment in workers, and brings many benefits to businesses of all kinds.

According to some financial experts though, there are drawbacks to employees taking part in gainsharing programs. Although these schemes can work very well, sometimes it can happen that a person becomes too involved with his or her own company. Investing all of one's capital in a business, as well as earning a wage from it can lead to a very complicated set of circumstances.

Some Facts on Gainsharing Programs

If the company continues to prosper, gainsharing programs can only be beneficial of course. But if the financial tide should turn, loyalty and trust can sometimes mean that an individual will not see the writing on the wall. Failing to heed warning signs could be a disaster to a large-scale participant in a gainsharing program that offers shares, for example. If the company should go bankrupt an employee could lose everything along with his or her employment, and for this reason, financial experts caution against total financial commitment in these cases.


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