The document describes different types of premium bonus plans that provide incentives for workers to increase productivity. Under a premium bonus plan, a standard time is set for completing a job and workers are paid for the actual time taken plus a bonus based on the time saved compared to the standard. The Halsey premium plan pays wages for actual time plus a 50% bonus on time saved. The Rowan plan calculates bonus as the proportion of time saved to standard time, providing increasing incentives for efficiency gains. The plans aim to increase production while sharing the benefit of time savings between workers and employers.

1. Presented by :
Athira .S .Kumar

2. Premium bonus plan
 Objective- to increase production by an inducement to workers in form of
higher wages for less time worked.
 A standard time is fixed for completion of a work .Workers are paid for time
taken to complete the job and the fraction of time saved on standard time by
away of bonus.
 This type of plan is called incentive plan as the workers has incentive to
earn more for less time worked.

3. Cont…
The system of wage system is of two :
 Time wage system – worker will not get any reward for time saved
 Piece work system - worker will get full payment for time saved.
 Premium plan-both the worker and employer will share the labour cost of time
saved.
Example: -
Std time is 10 hours
Time taken is 6 hrs
You will get 50% as bonus of saved time i.e. you saved 4 hrs for that bonus is
provided for 2 hrs.
So for time wage system worker will get wage for 6hrs and for piece work
system worker will get payment for 10 hrs for premium plan 8hrs( 6+2) hrs.

4. Advantages:
Increase in production
Workers get attracted to this plan as they can earn more wages.
High morale result in less labour turnover.
Disadvantages:
It is difficult to withdraw a scheme which is introduced once ,even it is
uneconomic from employer point of view.
Non acceptance from trade union may result in strikes and lock outs.
Some incentive schemes are complicated and expensive for administrators.

5. Halsey premium plan
 Under this method ,standard time is fixed to complete a job or operation
and worker is given wages for actual time to complete the job at agreed rate
per hour plus a bonus equal to usually 50% of the time saved.
 Formula: T x R + %( S- T) R
 T = time taken
 R= rate per hour
 S = standard time
 % that is usually 50% but in practice it varies from 33% to 66%

6. Advantages:-
It is simple to understand and relatively simple to operate
It guarantees time wages to workers
The wage of time saved is shared by both employer and workers
so it is helpful in reducing labour cost per unit.
 It makes distinction between efficient workers and in efficient
workers because it provide increasing incentive to efficient
workers
Disadvantages:-
 Quality of work suffer because workers are in a hurry to save
more and more time to get more and more bonus.
Its is criticised by workers as the employer get the share of
wages of time saved

7. Rowan Plan
 Under rowan plan the standard time is fixed for completing the job and the
rate per hour is fixed.
 If the time taken by the worker is more than the standard time, then he is
paid according to the time rate.
 In case he completes the work in less time than standard time then he is
entitled with bonus along with time wage.
 bonus =time saved /standard time.
 Formula for calculating total earning under this method is:
T x R +S-T/S x T x R where
T= time taken
R= rate per hour
S =Standard time

8. Advantages:-
 It guarantees time wages to workers.
 The quality of work does not suffer much. The worker is not
induced to rush through the work because bonus increases at a
decreasing rate at higher levels of efficiency
Labour cost are reduced because wages of time saved are shared by
the employer and the worker.
Disadvantages:-
The rowan plan is criticized by workers on the ground that they do
not get the full benefit of the time saved by them as they are paid
bonus of the portion of time saved.
 The rowan plan suffers from the drawback that two workers of
different capacity get same bonus

9. Comparison of Halsey and Rowan plan
1. In Halsey the premium rate vary between 33% to 66% of the time saved
but in rowan it is fixed so rowan protect employer and worker from loose
premium rate setting.
2. In hasley 50% of time saved is bonus it doesnot serve as a strong incentive
.on other hand in rowan bonus is claculated as time saved bears to
standard time it serves as strong incentive for increasing efficiency.
3. In rowan quality of work does not suffer much. As bonus is based on
efficiency. But in Halsey worker has to rush fast so that he can get 50% of
time saved as bonus.