Gainsharing and Power: Lessons from Six Scanlon Plans

Denis Collins believes that participatory management systems are inevitable in democratic societies because they are ethically superior to authoritarian management systems. Managers must begin to share decision making and economic outcomes with their employees if they want to obtain long-term efficiency and effectiveness in a competitive business environment. Changes in power relationships are bound to occur in the transitional period, Collins reports, and will challenge the flexibility of management.

Scanlon Plans were developed in the 1930s as a way to link improvements in productivity to employee wages. Popular because of the large amount of employee involvement in their design, Scanlon Plans are in place at 260 Fortune 1000 companies, as well as many smaller firms. To understand the considerable variation in the success of gainsharing plans and participatory management more generally, Collins studied six companies that used Scanlon Programs, explaining the nuts and bolts of each plan. He addresses the concerns of workers, managers, and unions when they were present, highlighting political games employees must address to enhance success. Collins then offers a new theory of gainsharing based on conflicts of interest at work.