Crash Course on Structuring and Transitioning to Impactful Gainsharing

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About the Webconference

Management of unit budget surpluses represents a significant opportunity to reallocate resources at most colleges and universities. Many institutions utilize a 100% carry-forward policy, where units retain all year-end surpluses. However, this often results in units accumulating massive reserves while the center struggles for funds. Conversely, other institutions manage unit budgets with a use-it-or-lose-it approach that pulls all year-end surpluses to central administration. This policy often creates a perverse incentive for unit leaders to spend down the balance of their budget at the end of the year to avoid losing funds.

The optimal middle ground between use-it-or-lose-it and carry-forward is gainsharing. Under this approach, units split any budget surplus with central administration. This “compromise” method benefits both units and the institution and combines the advantages of the two more extreme approaches.

To help business executives better manage unit budget surpluses, this 15-minute session highlights how institutions can successfully adopt a gainsharing model – both how to structure it and how to transition to a new model over time while minimizing campus resistance.