Which type of plan encourages employee suggestions by sharing cost savings with them?

The Scanlon Plan is a management strategy designed to encourage employee participation in cost-saving measures, thus improving productivity and overall efficiency. This plan operates on the principle of teamwork and cooperation, whereby employees are incentivized to identify areas for cost reduction and efficiency improvements. When the organization realizes cost savings due to these employee suggestions, a portion of those savings is shared with the employees. This not only motivates employees to contribute ideas but also fosters a sense of ownership and engagement in the company’s goals.

In contrast to other options, the Scanlon Plan is specifically structured around cost savings and employee involvement in the process of identifying efficiencies within the organization. Equity sharing typically involves distributing shares or ownership to employees but does not specifically focus on cost savings. Profit sharing provides employees a share of profits based on company performance but lacks the direct method of incentivizing cost-saving suggestions. A bonus structure usually rewards employees based on individual or team performance metrics and does not inherently involve cost-saving initiatives or sharing in those savings. Thus, the Scanlon Plan stands out as the appropriate choice for a plan encouraging employee suggestions through shared cost savings.