Implementing productivity gainsharing to influence the performance of value drivers employed by EVA

Abstract

The creation of shareholder wealth has become the key of corporate success. A setback in achieving this is a lack of commitment and participation in productivity initiatives at shop floor level in South Africa and companies are faced with competitive challenges of promoting innovativeness relating to productivity improvement amongst employees. It has increasingly been recognized that by introducing a carefully crafted incentive scheme, it may be possible to induce workers to work both harder and smarter and use existing technologies in new and better ways that enhance their productivity. The purpose of the study is to evaluate to what extend gainsharing can be a solution to the predicament. The empirical data used during the study was based on questionnaires that were administered amongst managers of Eskort Ltd. The research established that gainsharing would induce employees to effectively participate in problem solving or productivity improvement initiatives in the company. The majority of participants feel that gainsharing will benefit the company to deliver on client requirements; help enhance teamwork; create a feeling of ownership; share a portion of saved-cost for productivity improvement purposes; stimulate organization learning; improve communication between management and employees; stimulate employees to make suggestions on ways to improve productivity; and increase profit and reduce costs. The study clearly illustrates that money can be the primary drive for motivation to certain employees within the company. Further more based on the results of the empirical study the researcher came to the conclusion that motivated employees will be more productive and as a result have a positive influence on the value drivers employed by the EVA methodology. EVA is a value based performance measure, an investment decision tool and also a performance measure indicating the absolute amount of shareholder value created.