What is the primary function of the Scanlon Plan?

The primary function of the Scanlon Plan is to create a partnership between employees and management to improve organizational efficiency and increase profitability, which in turn can lead to financial rewards for everyone involved. The plan is designed to encourage teamwork, employee involvement, and a shared commitment to achieving cost-saving measures that enhance performance.

While allocating a fixed percentage of revenues for salaries may seem related to employee compensation, the Scanlon Plan specifically focuses on managing costs and sharing the benefits of increased productivity with employees through bonuses. Therefore, this option emphasizes the collaborative effort to keep the organization competitive and sustainable while rewarding participants.

The other options do not align well with the essence of the Scanlon Plan. The plan does not primarily reward individual performance but rather emphasizes collective achievement, which benefits the whole organization. Furthermore, it aims to reduce employee turnover by fostering a collaborative environment, and while it does often involve bonuses, immediate cash bonuses are not the defining characteristic of the plan; rather, it is more about shared savings and long-term financial health.