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An insight into wage incentives
This document discusses wage incentives and fringe benefits. It defines wage incentives as extra financial motivations designed to stimulate effort and reward performance. It then describes various types of individual and group incentive plans such as Halsey, Rowan, Emerson, and Scanlon plans. The pros of incentives include improved productivity and motivation, while the cons include risks to health from overwork. Fringe benefits are described as supplementary compensation provided in addition to wages, such as paid time off, health benefits, and retirement plans, with the objectives of improving industrial relations and employee welfare.
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An insight into wage incentives
- 1. An insight intoWage Incentives |Meaning |Pros & Cons | Kinds| Analysis| Fringe Benefits|
- 2. Incentive Compensation orWage Incentives • Extra financial motivations designed to stimulate human effort by rewarding the person. • Given to improve performance thereby achieving desired results. • Designed to attract and retain talent and for better utilization of human resource
- 3. Valid Incentive Plan- Essentials • Mutual trust & understanding while developing an incentive plan. • Sound Industrial relations • Worker’s participation • Scientific standards for payment of wages • Guaranteed minimum wage • Simplicity • Equitable
- 4. Valid Incentive Plan- Essentials • Economical • Flexibility • Prompt Payment • Adequate Incentive • Ceiling on earnings • Based on reasonable standards • Grievance Machinery • Proper Appraisal system • Follow-up
- 5. Wage Incentive Plans Individual Incentives Time Based 1. Halsey Plan 2. Rowan Plan 3. Emerson Plan 4. Bedeaux Plan Output Based 1. Taylor Plan 2. Merrick Plan 3. Gantt Plan Group Incentives 1. Priestman Plan 2. Scanlon Plan
- 6. Wage Incentive Plan Individual Incentive • Earnings directly related to the individual’s performance. • Time based or output based. • Based on standard time and calculations therein. Group Incentive • All other incentive plans given apart from individual incentive plans. • Creates teamwork and motivates new members • Defeats rivalry among members
- 7. Indi v idual Inc ent i ve Plans Halsey or Weir Plan • Developed by F.A. Halsey in Weir engineering works • A worker who completes his job in less than standard time is paid more • A bonus (usually 50 % ) of the time saved is paid • The bonus is calculated based on the time rate system Merits • Simple & easy to understand • Employer & worker get equal benefit • Guaranteed minimum wage for all Demerits • Not scientific and fair • Quality of work might be absent due to workers rush to completion • Much clerical work involved • Wastage and spoilage may increase 퐵표푛푢푠 % Total Wages = time taken * Rate of wage + 100 ∗ (standard time − time taken)∗rate
- 8. Rowan Plan •It was developed by James Rowan of England • A minimum wage guaranteed to every worker • A standard time is determined in advance • Total wages = • T*R + (T*R* 푇푖푚푒 푠푎푣푒푑 푠푡푎푛푑푎푟푑 푡푖푚푒 ) Emerson Plan • It was developed by Harrington Emerson • Standard time for the job is determined scientifically • Bonus is given at an increasing percentage beyond the prescribed level of efficient • Total wages= • (T*R)+(% of bonus*T*R)
- 9. Bedeaux point plan • This plan was developed by Charles E. Bedeaux • Standard time divided into standard minutes • Workers who completed the less than standard time are paid bonus • Bonus is 75% of the wages for worker and 25% for foreman Taylor’s differential piece rate system • Its about time and motion study where two piece rates are laid down • Lower rate for workers who fail to complete the task with in the time • higher rate for those who completes with in the time
- 10. Merrick’s multiple piecerate • This plan was developed to overcome a drawback which relates to an abrupt change in piece rate • Workers producing less than 83% of standard output are paid B.P.R • Those producing from 83% to 100% are paid 110% B.P.R those producing more than standard output are paid 120% of the B.P.R. Gantt’s Task and Bonus plan • This plan was developed by Henry L. Gantt • Minimum wage is guranteed to all workers • A worker who fails to complete the task with in given time paid for actual time spent • Workers who achieve or exceed the standard gets extra bonus varying between 20% to 50%
- 11. GROUP INCENTIVES PLANS In some cases, E.g.., assembly line industries it is not possible to determine individual performance Group based or team-based incentives plans reward all team members equally based on overall performance of the team member. Under group based incentive plan, individual out put can’t be measured. So team performance is evaluated on the basis of time taken rather than output produced, if team complete their target in well advanced to standard time the team member are eligible for incentives.
- 12. CONTINUED….. Paymentto team members may be made in the form of cash bonus or in the form of non-cash reward such as pleasure trip, times off or luxury items. Methods for team based incentives plans are – Preistman’s production plan – Towne’s plan – Scanlon plan
- 13. Wage Incentive -PROS Improvements in work flow Man machine relationship Motivation to earn more Productivity Improves Discipline Minimising Absenteeism Reduces cost of supervision Aggravates Team Work Creates Co-operation
- 14. Wage Incentives -CONS Workers may overwork and might spoil their health Risk of absence in quality due to time factor Resistance from employees Changes in technical factors Disregard of safety regulations Faulty management as a reason behind incentive plans Jealousy and conflict Increase in cost More clerical work
- 15. Fringe Benefits fringebenefits refers to the extra benefits provided to employees in addition to the normal compensation paid in the form of wage or salary.
- 16. Main features supplementaryforms paid to all employees indirect compensation help raise the living conditions may be statutory or voluntary
- 17. Objectives of FringeBenefits • To create & improve sound IR. • To motivate the employees. • To provide security to the employees. • To protect the health of the employees. • To promote employee’s welfare. • To create a sense of belongingness. • To meet the requirements of various legislations relating to FB.
- 18. Types of FringeBenefits Payment for time not worked. Employee security. Safety & health. Workmen’s compensation. Health benefits. Voluntary arrangements. Welfare & recreational facilities. Old age & retirement benefits.