PPt of Employee incentive Scheme

1. Employee Incentive
Scheme
DR. POOJA TIWARI
ABES EC, GHAZIABAD
AKTU, LUCKNOW

2. Employee incentive scheme
In the words of Burack & Smith,“An incentive scheme is a plan or program to
motivate individual or group performance. An incentive program is most
frequently built on monetary rewards (incentive pay or a monetary bonus), but
may also include a variety of non-monetary rewards or prizes”.
On the other hand, French says, the term “incentive system” has a limited
meaning that excludes many kinds of inducements offered to people to perform
work, or to work up to or beyond acceptable standards.
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

3. features of an incentive plan
Consists of both ‘monetary’ & ‘non-monetary’ elements.
Timing, accuracy & frequency of incentives
Proper communication of the incentive plan to the employees
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

4. Types of incentive plans
Individual incentives: offered to reward the effort and performance of individuals.
Group incentives: group or team incentive plans reward team members with an incentive bonus
when agreed upon standards are met or exceeded.
Organization wide incentives: organization incentives reward people for the performance of the
entire organization (such as profit sharing, employee stock options etc.)
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

5. Individual incentives
Individual incentive plans are the most widely used pay for performance plans in industry. These
pay plans attempt to relate individual effort to pay.
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

6. Taylor’s Differential Piece Rate Plan:
Under this plan, employees are paid on the basis of results.
This plan was developed by F. W. Taylor, the father of scientific management. Under this plan,
Taylor prescribed two piece work rates. One, a higher wage rate for those who reach the
standard work.
Second, a lower wage rate whose performance is below the standard.
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

7. Halsey Premium Plan:
Halsey, is a combination of the time and the piece wage in a modified form. Under this plan, a
guaranteed wage based on past experience is determined.
If a worker saves time, he gets 50% of wages for time saved (called premium) in addition to
normal wages. It is optional for the worker to work on the premium or not. Thus, this plan also
provides incentive to efficient workers.
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

8. Rowan Premium Plan
This plan was developed by D. Rowan in 1901. This plan, to a large extent is similar to that of
Halsey Premium Plan. The only difference is in regard to the determination of the premium.
Unlike a fixed percentage in case of Halsey plan, it considers premium on the basis of the
proportion which the time saved bears to the standard time.
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

9. Gantt Task and Bonus Plan
This plan is devised by H. L. Gantt. This plan combines time, piece wage and bonus. Standard
time, piece wage and high rate per piece are determined. A worker who cannot complete
standard work within standard time is paid only the minimum guaranteed wage. A worker
performing up to the standard level of work gets time wage plus a bonus @ 20% of normal time
wage. If the worker exceeds the standard, he is paid a higher piece rate but there is no bonus.
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

10. Group incentive scheme
1. Scanlon Plan:
The Scanlon plan was developed by Joseph N. Scanlon, a Lecturer at the Massachusetts Institute
of Technology in USA in 1937. The plan is essentially a suggestion scheme designed to involve
the workers in making suggestions for reducing the cost of operation and improving working
methods and sharing in the gains of increased productivity.
2. Preistman’s production bonus: Under this system, a standard is fixed in terms of units or
points. If actual output, ,measured similarly , exceeds the standard, the worker will receive
bonus in proportion to the increase.
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

11. Organization wide incentive plan
1. Profit-sharing
2. Gain-sharing
3. Employee stock Ownership plan (ESOP)
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW

12. Thank You
DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW