Employee Gainshare Plan Case Study: Titanium Investment Casting Company

Scanlon Employee Gainshare Plan Case Study: Titanium Investment Casting Company (250)Case Highlights:

This 1998 installation was in a titanium investment casting company that had been through a number of ownership changes and whose employees had very little identity with their “current” employer.  They had recently been through a brutal Union organizing campaign which the Company won solidly.

The company labored in the shadow of a far larger competitor in Portland Oregon who competed for generally the same customer base. This companies wage and benefit package was superior to the instant case.

Employee contest to name the plan and the winner was: T—- Employees Achieving Milestones (TEAM).

Challenges:

The organization had just gone through yet another change in ownership and an intense Union organizing effort by the IAMAW.  Morale was low and a substantial number of employees did not trust the Company.  Communications were limited and there was little to no identity with the Company or the mission of the Company.  Additionally, many employees felt that they should receive the same wages and benefits as the employees of the aforementioned competitor just 60 miles up I-5.

Solutions:

A gainshare plan modeled after the Scanlon process was designed and written by the senior Management Team with assistance from the Scanlon Leadership Network and it’s President1.  A well respected member of the HR team was appointed as a full-time Gainshare Coordinator2.  All employees were educated on the Principles and Processes associated with Scanlon driven gainshare plans.  Production councils were inaugurated and an overall Screening Committee was created.  Management/worker communications were dramatically improved.  While the President3 who initiated the plan left the company shortly after implementation the organization was extremely fortunate to get a new President4 who was a strong believer in employee involvement and a gifted leader.  Monthly meetings were held with every employee on every shift by this President and he focused the Senior Management Team on success through people.  During these meetings the variables that made up the gainshare calculation were presented, explained and studied.  These meetings did not take the place of the monthly Production Council meetings or the monthly Screening Committee meetings that were held without fail.  The Gainshare Coordinator was very well liked and respected and her enthusiasm and passionate nurturing of the plan in it’s infancy was indispensable.  The goal was to improve EBITDA5 by focusing on:

  • Safety performance
  • Turnover
  • Cost of quality
  • On time deliveries
  • Inventory turns

Benefits:

Initially employees were somewhat overwhelmed by the new openness and they did not know how to contribute.  As they went up the learning curve, due in large part to the Presidents willingness to invest money and time in the nurturing of the process, they became partners in the plans success. Significant improvements were made in every one of the 5 measurements and this resulted in historical highs in EBITDA.  Bonuses were averaging 4-8% monthly after the 50-50 split between the company and the employees.  Several negative improvement months were experienced and this proved to be healthy for the plan as it gave the Company President opportunity to explain what had happened.  It was rewarding to see employees genuinely interested in why the companies results were as they were each month.

  1. Mr. Paul Davis
  2. Ms. Lisa Cox an outstanding, employee oriented human resources professional
  3. Mr. Rich McKinney
  4. Mr. Randy Turner, still the President of what is now a $60 million business
  5. EBITDA – Earnings Before Interest, Taxes and Depreciation Allowance