The Scanlon Plan for Individual and Organizational Effectiveness.

Information on Gainsharing, Employee Involvement, Openbook Management, and Leadership

The Scanlon Plan was developed from the innovative work of Joseph Scanlon during the 1940s and 1950s. Joe’s experience as a steelworker and union leader during the Depression prompted him to conclude that a company’s health, indeed its very survival, required a climate of cooperation rather than competition between labor and management. As a staff member of the United Steelworkers of America, he used his ideas to improve productivity thereby saving many organizations and jobs.

Joe’s work came to the attention of Dr. Douglas McGregor at the Massachusetts Institute of Technology, where he was invited to join the faculty. Together, McGregor and Scanlon pioneered the concept of employee involvement. The early “Scanlon Plans,” as they were labeled by Joe’s clients, included a monthly cash bonus to all employees when labor costs were reduced below historical base periods. So, Scanlon not only pioneered employee involvement, but was one of the early developers of gainsharing. Unfortunately, Joe Scanlon’s premature death in 1956 denied him the opportunity to fully realize the impact he had on world industry. It is a tribute to Scanlon’s genius that interest in participative management and productivity “gainsharing” have reached international proportions.

Development of the Frost/Scanlon Principles and Processes/Fred Lesieur

Upon Joe’s death, his work was carried on by his friends and colleagues. Dr. Carl F. Frost at Michigan State University, became one of the most influential and dedicated Scanlon practitioners. Dr. Frost refined Scanlon’s ideas into four fundamental Principles/Processes; Identity/Education, Participation/Responsibility, Equity/Accountability, and Competence/Commitment. The Frost/Scanlon process creates organizational effectiveness while promoting individual growth and responsibility. It enables management to create a rational working environment in which each employee’s dignity is recognized and every employee’s potential is challenged in achieving the organization’s objectives. Dr. Frost’s influence can be seen in the progressive cultures of organizations such as Herman Miller, Donnelly, Motorola and Beth Israel/Deaconess Medical Center. Former students of Dr. Frost continue to carry on his work.Wescast Industries, Herman Miller, Donnelly, Motorola, and Beth Israel Hospital-Boston have all been recognized as being among “The 100 Best Companies to Work For in America.”

Fred Lesieur (deceased) was another colleague of Joe Scanlon. Fred was President of the Steelworker’s local where Joe worked. Fred conducted the MIT Scanlon Conferences. He edited “The Scanlon Plan for Organizational Development” and helped to install Scanlon Plans throughout North America. The participative cultures of Dana Corporation and National Manufacturing are examples of Fred’s work.

Misconceptions about Scanlon Plans

Much that is written about Scanlon Plans is outdated and wrong. It is a misconception to view the Scanlon Plan narrowly as an incentive system, quality of work life program, or suggestion plan. In fact, it is not a plan at all, in the sense that it does not specify a procedure to be followed in a standardized fashion; no two Scanlon Plans are alike. Rather, it is a demanding process designed to continuously improve an organization’s productivity and develop its employees. Today, the Frost/Scanlon Process is based on the belief in the dignity and the untapped potential in every human being. It consists of a set of fundamental principles and a participative process that has been tested and proven for over sixty years in a wide variety of settings