Data were obtained from Department of Defense (DOD) officials and installations having experience with gainsharing programs. (Gainsharing programs measure gains in employee productivity and share the resulting savings between employees and the organization.) Analysis of private sector studies on gainsharing efforts identified three major trends in private sector efforts: (1) gainsharing by programs based on organization-wide productivity measurement are replacing those programs based on individuals or small group productivity measurements; (2) high success rates are being achieved by organizational-based programs; and (3) employee participation systems are being incorporated into gainsharing programs. All the gainsharing efforts in DOD reported cost savings. Some installations reported indirect benefits, including decreased sick leave usage and reductions in work backlogs and overtime costs. Major barriers to gainsharing programs were lack of specific legislation authorizing such programs and absence of Office of Personnel Management policies and guidance. Four principal elements critical to the success of gainsharing programs were identified: continuous and visible top management support, employee participation systems, definable and accurate performance measures, and adequate workloads to absorb productivity increases. (Following the four-page reporting letter are these appendixes: introduction, information on gainsharing trends in private industry, information on DOD gainsharing efforts, elements that facilitate success, and private sector organizational and DOD gainsharing examples.) (YLB)