An improshare plan is a type of gainsharing plan which is based on a mathematical formula that compares a baseline of performance with actual productivity during a given period. When the actual productivity is greater than the baseline, a percentage of savings is shared with employees. Improshare plans measure changes in the relationship between outputs and the time (input) required to produce them. This plan is minimally affected by changes in sales volume, technology and capital equipment, product mix, or price and wage increases. It's the easiest of the gainsharing plans to understand and install.
It is an industrial engineering-based gainsharing plan that uses past production records to establish base performance standards. The ImproShare plan, which was developed in 1973, measures only labor cost and uses time standards and past production records to set a production criterion. The difference between current labor hours to produce a given amount of output and past labor hours on similar output is the basis of the bonus formula.
