Final answer:
Gain sharing does not strictly require a historical benchmark to be viable. Innovative metrics and baselines can be established, creating a functional gain sharing plan even without prior data.
Step-by-step explanation:
Gain sharing is a performance-based compensation strategy intended to encourage collaboration and increase productivity among members of a group by sharing the financial gains achieved through their efforts. The statement that gain sharing is not a viable plan to use if no valid historical benchmark can be set is false. While having a historical benchmark can be helpful in measuring improvements and setting goals, it is not absolutely necessary for a gain sharing plan to be effective. Innovative baselines can be established, alternative metrics can be created, and the program can be designed to adapt as valid data is collected over time. The essential components of a gain sharing plan include effective communication, clear goals, and a mechanism for fairly distributing gains among participants.