Which gainsharing plan rewards employees for savings in labor costs from their suggestions?

The Scanlon Plan is specifically designed to reward employees for suggesting ways to reduce labor costs and improve operational efficiency. It focuses on creating a collaborative environment where employees are motivated to identify cost-saving opportunities and contribute to the organization’s overall productivity. The plan works by establishing a baseline of labor costs and then rewarding employees based on the savings realized from their implemented suggestions.

This structure not only enhances workers' engagement but also encourages a culture of continuous improvement. Employees see a direct link between their contributions and potential financial benefits, which can lead to higher levels of motivation and performance. The Scanlon Plan's emphasis on labor cost improvements makes it uniquely suited for this kind of reward system.

In contrast, profit sharing plans typically distribute a share of the company's profits based on overall performance rather than direct suggestions from employees. Performance bonuses are often tied to specific individual or team accomplishments, rather than systemic savings. Team incentive plans, while focused on collaborative performance, do not specifically target labor cost savings through suggestions. This is why the Scanlon Plan is the most fitting choice for recognizing employee contributions that lead to labor cost savings.