Gainshaling incentive plans and mining: An introduction

"Most mine managers in Canada today will agree that one of the keys to mining efficiency and productivity is their human resources. A5 a result, many mines develop some sort of incentive designed to tap their employees' capabilities to the fullest extent. Historically, the most common plans used have been ""piece-rate"" plans, where individual or small groups of miners are paid a financial bonus based on some measure of their productivity. Recently, however, incentive plans that take a more team-based approach have been developed in some Canadian mines. One such plan will be defined in this paper, and its popularity in the industry today discussed.Gainsharing PlansThere are two primary components to a gainsharing plan. The first is a cash incentive, which is paid to all employees and based on factors that are highly correlated with employee productivity, and key to the profitability of the mine. For example, the typical gainsharing cash incentive is based on the cost/unit of metal produced. Management (in consultation with employees in some cases) will establish the budgeted cost per tonne, and any savings in this amount is shared between the company and the employees. The second is a management philosophy and associated communication network, which is designed to foster an environment that encourages information exchanges, communication, participation, and trust between employees and management. The typical gainsharing communication network consists of two tiers of committees. The first, operational committees, include all employees working in the same department or departments which frequently interact. The employees meet monthly with management personnel to discuss problems encountered and brainstorm for solutions. In most cases, these committees will nominate a person in the group to structure the meeting to maximize its efficiency. The second, the screening committee, is a single group consisting of representatives from the various operational groups, whose primary job is to ensure that the plan is effective, and the objectives and results generated by the plan remain consistent with the mine objectives. In short, gainsharing plans tell employees that their bonus depends upon performance and then gives them the opportunity and incentive to affect that performance. The opportunity is provided by a communication network and positive management practices, and the incentive comes in the form of ""intrinsic"" rewards of participation and the ""extrinsic"" rewards of the bonus payments. Figure I will clarify the relationship between the intrinsic and extrinsic rewards."