Gainsharing: providing incentives for process improvement

Gainsharing links pay for performance with employee involvement in improving operations. As operational performance improves, employees share financially in the gain. A successful gainsharing program addresses two primary issues: employee involvement and the formula for bonus payout. The formula must be simple and understandable, and the employees must see clearly how they can influence the probability of a payout. In 1995 Boulder Community Hospital (BCH) instituted a gainsharing program called "Encore! Quality Share." A design team consisting of employees from all levels of the organization developed the plan. "Team norms" encourage group discussion without regard to the institutional power of team members and call for consensus when making decisions. Major components of the gainsharing plan include standardized cost measurement per patient discharge, quality control feedback through patient surveys and designated quality levels for adjusting the amount of payout. The plan was introduced through educational seminars for employees. Quality improvement training and new employee orientation now include presentations on Quality Share. Early indications show that BCH's gainsharing program is a success. Significant payouts were made to employees at the end of the first and second quarters. Because success in the first two quarters seemed relatively easy to attain, safeguards against complacency are now being discussed.