Section Four
Unfortunately, the Du Pont plan, which also constituted a
form of variable pay, was terminated two years after its
implementation. The plan failed because of poor business
conditions, which severely restricted or eliminated bonuses, and
employees’ failure to cope with the downside risk. The plan also
conflicted with Du Pont’s centralized culture and strategy by
compensating employees for departmental results. The plan’s
failure highlights the importance of careful planning and
preparation necessary for successful implementation of such
compensation programs. In contrast to Du Pont’s experience,
Nucor Steel’s gain-sharing plan has been in existence for over
25 years. Part of the success of Nucor’s plan is probably due to
its compatibility with the company’s “no frills” culture.^36
Because of the broader application of gain sharing, its
impact on the productivity of whitecollar workers has been the
subject of recent research. An office of a large public
accounting firm operationalized gain sharing as a percentage of
labor savings, which were determined by subtracting actual
labor costs from allowable labor costs. The study found that
gain sharing increased productivity and that employees worked
“smarter.”^37