Gainsharing in Courts

“Profit-sharing and other incentive plans are hardly novel in the corporate world,” write David C. Ammons and William C. Rivenbark in the Spring/Summer 2006 issue of Popular Government. “They are regarded simply as good business – good for employees and good for the company and its shareholders,” they say. Ammons and Rivenbark, who are on the faculty of the School of Government at the University of North Carolina, are studying a type of profit-sharing system called “gainsharing” used by local governments in North Carolina and across the nation. I had a chance to discuss gainsharing in state and local courts with Professor Ammons last week.

Defining Gainsharing

In response to lessons learned in the private sector, judges and court administrators are quick to remind us that courts are not driven by profits and, therefore, profit-sharing and similar incentive plans simply are not possible for them. That’s true, but courts do have budgets and balance sheets, and actions that trim costs (or increase revenues from fine collection, for example) and help the bottom line, even though the “gains” are not called profits. Gainsharing is different from profit-sharing programs.

Simply put, gainsharing is a system whereby units of government share in the gains employees make in their bottom line or that of the state, county or city, without losses in quality of services and programs. Employees receive bonuses or payments based upon the improved productivity or efficiency as reflected in "gains" in costs savings or revenue increases. Gainsharing is consistent with widely accepted management principles that encourage employee initiative in continuous improvement of program and services to meet the needs of customers and citizens.

A critical feature of gainsharing is its dependence on measurable results that are within the control of a given unit of government. For example, gainsharing in a court might depend on a court unit or program hitting performance targets such as a specific decrease in cost per case, an improvement in trial date certainty or juror utilization, or an increase in collection of monetary penalties, which positively impacts the bottom line of budgets and balance sheets of the court, its justice system partners, or both. A decrease in cost per case might be seen directly in a court’s balance sheet, while an improvement in trial date certainty may be seen most significantly in decreased expenditures for witness notification by the prosecution.

Gainsharing arrangements vary widely in their design and the degree to which they are integrated into the key management and operating systems of the organization or unit of government. Model gainsharing programs, according to Ammons and Rivenbark, have three characteristics: (1) they focus on opportunities to decrease costs or increase revenues; (2) they include meaningful employee participation (an increase in revenues due solely to a statutory fee increase, for example, would not qualify for gainsharing because it was initiated by legislation and not by actions of employee action); and (3) employees receive bonuses or other benefits based on group success in desired gains.

Gainsharing arrangements focus on joint performance. They are performance based compensation reward systems that tie pay to team or group performance rather than individual performance. Gainsharing rewards are not necessarily limited to individual employee bonuses or payouts -- an arrangement that may be problematic for courts tied to authorized forms of payment to public employees. Group success in achieving desired results could be rewarded by group awards, both monetary and non-monetary. Local governments in North Carolina, for example, have adopted various forms of what Ammons and Rivenbark call ”greater-flexibility-for-greater-accountability exchange” whereby counties reward departments with managerial flexibility (e.g., the ability to shift funds, adjust positions, and carry over unspent funds from one year to the next) in exchange for demonstrable results.

Gainsharing and Performance Measurement

Gainsharing and performance measurement go hand in hand. On the one hand, the accountability that derives from an effective court performance measurement system (CPMS) directly addresses concerns that services quality in gainsharing arrangements may decline as employees cut corners to create cost savings. For example, to qualify for gainsharing, decreases in cost per case would need to be achieved while maintaining specific levels of court user satisfaction and case clearance rates.

On the other hand, gainsharing provides specific opportunities to integrate performance measurement and management with key management processes and practices that are involved in gainsharing. Of course, the more they are integrated into the day-to-day operational systems, the more commitment there is to performance measurement and management. As I have argued in previous posts, for performance measurement to be truly effective in changing the way a court does business, performance measures have to be hard-wired into the very DNA of the court’s leadership, management and organizational culture. (See Made2Measure, Needed: An Instructions Manual for Implementing Performance Measurement, January 7, 2007). Gainsharing arrangements may achieve this for some measures.

For employees to be properly motivated, they must understand what they need to do - specifically - to make the performance happen. Properly designed gainsharing arrangements will make it clear to employees in terms of unambiguous and actionable performance measures what needs to be done for the gainsharing goals to be achieved.

Will Gainsharing Work in Courts?

The promise of gainsharing is that it may help courts achieve sustained increases in productivity and efficiency, that employees may become more involved in the gains made by the court as they share in the benefits of employee-initiated improvements, that it enhances commitment to organizational goals, and that it leads to improvements in other measures of court performance.

Gainsharing has been shown to be successful in local government. Hospitals also have instituted types of gainsharing programs that have had favorable results (see Made2Measure, Pursuing Perfection – A Lesson from Health Care, November 6, 2005). A search of Google and the National Center for State Courts website yielded no evidence of gainsharing arrangements in state and local courts. Would gainsharing work in courts?

Putting aside questions of their legality and opposition to them on philosophical or political grounds (e.g., wages paid to employees already oblige them to do the best they can), gainsharing arrangements seem well suited for many court programs and services such collections of fines and fees and jury utilization where performance levels can easily be quantified in monetary terms.

That it may integrate performance measurement with a court’s day-to-day operations, may be enough of a promise to give gainsharing a try in state and local courts.

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