Scanlon Plan

Scanlon Plan is shorthand for schemes that reward workers (typically in industrial manufacturing companies) for suggesting and adopting new work practices that lead to improved productivity. Named for a United Steelworkers Union representative at a failing plant in the 1930s, Joseph Scanlon (a trained cost accountant), the impact of a company’s bottom line is greater output per dollar spent on labor and sharing the gain with the workers by paying productivity “bonuses.” Scanlon plans inherently assume workers know how to improve productivity and have to be bribed into doing so if they are given a share of the improvement.
A Scanlon plan instituted at the family-owned Engstrom car and truck mirror manufacturing plant in Indiana in the late 1990s
The plan then echoes management's traditional rewards by handing groups of workers (now designated “teams”) “bonuses” in the form of a share of the financial gains from improved efficiency of operations. However, the division between “workers” and “management” remains. Scanlon Plans operate on two assumptions, one explicit and the other implicit. Explicitly such plans assume workers have ideas for improving productivity (defined as units of revenue per dollar of labor costs). Implicitly, they assume that workers will reveal and implement these ideas only in exchange for a bonus, without which things would be left to continue as before with improvements resisted through union work rules. This is the language – or the attitude -- of “class warfare.” Experience suggests that after an initial period of improvement, rewarded by “bonus” pay, operations will settle into a new, more efficient, routine, which will become the new “base” from which management will continue to seek improvements – and be disappointed if they are not
5) cites a specific example at the Engstrom plant. Before Scanlon, technicians who repaired polishing machines typically brought a single tool to a broken machine, walked back to their station for one more tool, and so on repeatedly as needed until the machine was repaired. After Scanlon, the same techs brought their entire tool cart on the first trip, thereby reducing down-time and helping to improve overall productivity. The Scanlon Plan was credited with persuading those techs to volunteer a change in behavior in order to collect a share of the benefit, shared by everyone (after all, less downtime meant more work for everyone). Scanlon plans use management terms like “bonus” and “teamwork” to suggest camaraderie and common purpose, when in fact underlying management attitudes reflect a sense of “class warfare,” although not put quite so bluntly. From the perspective of union members, Scanlon Plans seem to be a good thing -- a fair sharing of worker contributions to higher profits, rather than a traditional unrewarded speedup of the assembly