There are four relatively simple principles for understanding why Gainsharing works. These principles may not be complicated, but they are powerful. All four are incorporated in the strategy used to install and maintain a successful plan. The four principles address equity, identity, involvement, and what I refer to as commitment. The four principles are interrelated and mutually reinforcing.

Equity
Gainsharing companies believe it is fair to share. A bonus system is established to reward for improved performance which provides a common focus, "a score ." Everyone in the organization makes a contribution to the institution’s success. Why only limit bonuses to the select few? People typically take pride in their work and have a strong desire for respect in what they do. Sharing says to the workforce, "We all contribute. That contribution is respected. Let’s financially share the benefits."

Identity
The principle of identity speaks to the sense of purpose, belonging, accountability, and ownership. When performance is measured, communicated, and gains financially shared, the workforce develops an appreciation and understanding of the organization’s needs and goals. The level of awareness is heightened as information is shared. Many questions are asked about the operation's performance, customers, and the overall business climate. Employees develop a better understanding and appreciation for the business. As understanding grows, there is recognition for the need for change. Change leads to improvement, and improvement leads to gains. An attitude of "we" rather than "them" is developed. Identity is a key to advancing employee involvement.

Involvement
Gainsharing cannot be successful without involvement. As identity and the sense of ownership are developed, employees will naturally have ideas on ways to improve performance. Many managers have learned that the people performing the work often have the solutions that best solve the problem. This is true, because the worker is involved and more committed to implementing the solution. People support what they create. In a Gainsharing environment, employees participate in the process of generating suggestions, making decisions, and implementing improvements. The system gives people the opportunity to have their ideas heard, in other words, a system for “listening.” As a result, communications, cooperation, and teamwork improve.

Commitment
Undoubtedly, the most important single principle for a Gainsharing plan's success is the organization’s commitment, particularly management commitment. A strong management belief in people and their value is required. The organization must have a capable management team with a dedication to continuous improvement and the recognition for the need for change. Ongoing communication, training, and education must be a long term focus. Commitment is the key to the total process. No management initiative can be accomplished without it.