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Sears Roebuck To Test Employee Gain Sharing

November 13, 1994|From Reuters

NEW YORK — Sears, Roebuck and Co., the nation's third biggest retailer, plans to test the waters of employee gain sharing, an experiment that will be closely watched by management experts as well as other major retailers.

Under gain sharing, employees present suggestions to a screening committee of their peers and managers. If a suggestion is adopted, the employee and the company share any profits that result, usually on a matching dollar basis.

A form of employee incentive common in manufacturing, gainsharing is rarely used among retailers, and the Sears' trial will be followed with keen interest.

A spokeswoman said Sears would make an announcement about its plans next year. The retailer employs 300,000 workers at 800 outlets.

Gain sharing originated in the early 1940s, an idea of steelworker and union leader Joe Scanlon, and it has proven particularly successful in manufacturing.

Companies such as Martin Marietta Corp., Motorola Inc., Herman Miller Inc., Ameritech and Boston's Beth Israel Hospital have profited from successful so-called Scanlon Plans, according to a recent report in Harvard Business Review.

Gain sharing "is moving out from its traditional base in manufacturing - where it was relatively easy to install - to service industries such as hospitals, financial institutions and transportation companies," said Steven Markham, a management professor at Virginia Tech in Blacksburg, Va.

Jack Fraser, a vice president of the National Retail Federation in Washington, D.C., said he did not know of any major retailers currently using gain sharing.

"There was a lot of talk about it in 1991, but we ran into a recession, and it was difficult to have a payout, so people lost interest in it," he said. The timing now may be perfect."

But gain sharing in retail may have some problems, said Murray Forseter, editor of "Chain Store Age Executive," a trade magazine.

"Starting true gain sharing would be pretty hard because it deals with the smaller things. I'd be real interested to know myself how they would do it," he said.

Wal-Mart Stores Inc., the nation's largest retailer, has a profit-sharing plan, "but it is not hooked up to productivity," a spokesman said.

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