Gainsharing encourages employees to increase their discretionary effort because the extra effort will produce financial gains.

Question

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Gainsharing aligns the financial incentives of the employees with the company's overall goals, encouraging them to go above and beyond their regular duties to drive cost savings and productivity improvements. As a result, employees feel more motivated and invested in the success of the organization, leading to increased discretionary effort.

Gainsharing Encourages Employees to Increase Their Discretionary Effort Because the Extra