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Definition

Scanlon Plan

Definition (1):

The Scanlon plan is remarkably progressive, considering that is now more than 70 years old.

It is an incentive plan developed in 1937 by Joseph Scanlon and designed to encourage cooperation, involvement, and sharing of benefits.

Definition (2):

Scanlon Plan is a cost-saving, gain-sharing, productivity-incentive plan in which any saving (agreed-upon standard labor cost per unit of output subtracted from actual labor cost per unit of output) is shared equally between the workers and the organization.”

Definition (3):

The Scanlon plan needs the formal participation of employees along with employee reporting and persistent performance reviews.

This gain-sharing program tries to engage employees more directly in the decision-making process of a company. As both the employers and employees will benefit from this plan, both should acknowledge and value the significance of each other’s contributions and suggestions. The relationships between employers and employees ought to be more stable and the employees ought to feel a sense of belonging to the company for making these plans to work.

Scanlon plans have five basic features. Such as (1) philosophy of cooperation, (2) identity, (3) competence, (4) involvement system, and (5) sharing of benefits formula.

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