1. Time Based Systems

Individual Incentive

Systems

Halsey Plan.

Rowan Plan.

Emerson Plan.

Bedeaux Plan.

A. Halsey plan• This plan was first designed by F.A.

Halsey of Rand Deill Co., Canada.• According to this plan, a standard

time is fixed for completing a work in advance.

• If a worker completes his task in less than standard time is paid for some of the time saved.

• Generally wages for one half of time saved are paid.

Example.Time allowed for a task :20 hrsActual time taken :15 hrsHourly rate of pay :Rs.1.50Calculate the wages of the workers.

Solution. 15 X 1.5 +(20-15/2) X

1.50 = 12.50 + (2.5X1.50) =22.50 + 3.75 =Rs.26.25

In this equation, a worker gets Rs. 3.75 as incentive for saving four hours.

T X R + (S-T/2) X RS=standard time taken.

T=time taken.R=hourly rate.

Merits and demerits.Merits.

Simple.Beneficial to efficient

workers.Minimum base-wage

is guaranteed.No need to over

speed.

Demerits.Fixed percentage of

return.Fixing of standard

time.Quality suffers.

B. Rowan planThis system is very much similar to Halsey’s

plan.The only difference between Halsey and

Rowan Plans is the method of calculating bonus.

In this bonus is that proportion of wages of the time taken which the time saved bears to the standard time allowed.

T X R + (S-T/2) X T X R

Merits and demeritsMerits.Guaranteed minimum

wages.Efficiency is rewarded.

Demerits.

Calculation of bonus is complicated.

Discourages workers to over-achieve.

C. Emerson planEmerson has developed this efficiency plan in

1910.Under this, a standard output is fixed for

determining the efficiency of worker.A worker reaching 66 2/3% of efficiency is paid

only minimum wages and bonus is paid only when his efficiency crosses this limit.

Merits and Demerits.Merits.Simple & easy to

understand.Guaranteed minimum

wage.Encourage workers.

Demerits.More clerical work.Discourage the

workers.

D. Bedeaux plan• This plan was devised by Charles E. Bedeaux in

1911.• This plan provide comparable standards for all

workers.• In this benefit of time saved goes to both to the

worker as well as to his superior in the ratio of ¾ and ¼.

• The standard time for each job is determined in terms of minutes which are called Bedeaux Points or B’s.

Each B represents one minute through time and motion study.

Merits and Demerits.Merits.Simple.Guaranteed

minimum wages.Motivated

Supervisor.

Demerits.Quality suffers.More clerical work

& complicated work.

Workers do not like that foreman should share their bonus.

2. Productio

n

based Systems

Taylor’s Differential Place Rate

System

Gantt’s Task And Bonus

Plan

A. Taylor’s differential piece-rate system

The underlying principle of this system is to reward an efficient worker and penalise the insufficient worker.

Under this, a standard time was fixed for completing a task, if a worker completes the task in the standard time he is paid at higher rate and lower rate is paid if more than the standard time is taken.

Fe a t u r e s .• No minimum wages are guaranteed.• A standard time is fixed for completing

the task.• Higher rate is given if work is

completed in standard and lower rate is offered if more standard if more time is taken.

Merits and Demerits.Merits.• Simple.• Good incentives to

efficient worker.• Preferred by

employees.

Demerits.• Punish slow workers.• Disunity among

workers.• No guaranteed

minimum wages.• Quality suffers.

B. Gantt’s task and bonus plan

• A standard time is fixed for completing the work.

• A worker taking standard or more time gets wages on an hourly rate.

• A bonus ragging from 25% to 50% is paid for completing the task in less than standard time.

• Demerits.Less efficiency of workers.Disunity among workers.

Group Incentive Systems

Priestman’s Plan.

Scalon Plan.

Co-Partnership Plan.

Profit Sharing.

A. Priestman’s plan• Under this plan a standard production is fixed

for the whole factory.• If productivity exceeds the standard then

bonus is paid in accordance with the increase; and if not workers will get minimum wages only.

• A team spirit is visible because production will increase with the collective efforts of everyone in the organisation.

B. Scalon plan• This method is named after Joseph Scalon of USA.• In this, a payment of one percent participating

bonus for every one percent increase in productivity.

• The bonus is available to all employees except top management.

• For this bonus, a reserve fund of one- half of first fifteen % is created for off setting any change in labour cost; and after every year if the reserve is unused it will distributed among employees in last month of the year.

C. Co-partnership• Under this scheme, the employees are offered

shares of the enterprise at reduced rates.• The underlying of this method is to make

workers feel themselves as a part of the organisation and understand the viewpoint of the management.

• Because as a co-partner they will try to make the concern more and more profitable.

D. Profit sharing• In this plan workers should also get a part of profits

for contributing their labour.• These profits are paid to workers in addition to their

nominal wages. • The payment is made after ascertaining net profit.Objective-• To recognise the right of workers for sharing the

prosperity of the company.• To make workers feel as members of the enterprise

rather than only employees.• Cordial relations between employees and employers.

Merits.1. Increase in productivity.

2. Cordial relations.

3. Reduction in labour turnover.

4. Additional earning for workers.

5. Less need for supervision.

Demerits.1. No

distinction b/w Efficient & Inefficient

workers.

2. Uncertaint

y of profits.

3. Manipulati

on of Accounts

4. Opposition of Trade Unions.5.

Inadequate

Incentives.