McDowell and co ltd

EXECUTIVE SUMMARY

Industrialization plays an important role in the economic development of a country. The gap
in per capita income between the developed and a developing country like India is a serious
concern. This is mainly due to the disparity in the structure of their economies. The former
are large industrial economies while the latter are mainly agriculture-based economies.

The distillery of McDowell & Co Ltd is situated in hatidah, Patna District, Bihar. It can be
grouped under a large-scale industry as the capital investment covers over crores of rupees
and the number of labourers employed is also more. It can be grouped as a secondary
industry because it produces goods, which are used for consumption.

The industrial revolution paved the way for the development of machinery, use of
mechanical energy and establishment of factories employing large number of people.

Personnel management is that part of management which is concerned with people at work
and their relationship within an enterprise. Its aim is to bring together and develop into an
effective organization the men and women who make up an enterprise and having regard for
the well being of the individual and of working groups, to enable them to make their best
contribution to its success. An “incentive or reward” may be anything, which attracts a
worker’s attention and stimulates him to work. An incentive scheme is a plan or program to
motivate individual or group performance. An incentive plan may consist of both monetary
and non-monetary elements. It can play an important part in improving an employee’s
efficiency.
The research study on “Effectiveness of the incentive schemes introduced in McDowell &
Co Ltd” was undertaken in the company’s distillery at hathidah, in Bihar t study the impact
of the incentives provided and its effect on the functioning and productivity of the company.

1
 McDowell and co ltd

The strength of the labour force of the company is 173. Incentives are paid only to the
workers and not to the managerial cadre. The bottlery employees and the general /staff
category enjoy different percentages of the incentive payments.

The study was conducted by collecting data using questionnaires. Questionnaires were
distributed to workers to collect the relevant information. It contained both open ended and
close ended questions. The questions were designed to gather all relevant information
regarding the effectiveness of the incentives in the areas of production, industrial relations,
motivation of the employees etc. The sample size was restricted to 40 for bottlery and 20 for
general /staff category.

The study revealed that the incentive scheme increases productivity and creates inspiration in
workers to contribute more towards the bottom line. The study has helped the company to
analyze the effectiveness of its incentive schemes.

2
 McDowell and co ltd

1.1 INDUSTRY PROFILE

ALCOHOLIC BEVERAGE INDUSTRY

The Indian alcoholic beverage industry is classified into beer, wine, country liquor; Indian
made foreign liquor and the imported spirits segments. Under the constitution of India, the
beverage alcohol industry is a state subject. The industry is highly regulated by the union and
the state governments. While licensing Greenfield units or sanctioning capacities for
production of alcohol is the central government’s domain, the authority to impose taxes,
regulate distribution, storage and marketing lies with the state’s 65% of the industry is
directly controlled by the state governments. With 29 states and union territories framing
their own regulations and tax policies, which often change dramatically from year to year,
the industry is often at a loss in planning for growth and investment.

In the recent times the beverage alcohol industry has been characterized by continuous down
trading by consumers in the face of inexorably raising prices, driven by ever increasing
levels of tax. This industry’s profitability is highly dependent on government regulations.

Changing cultural attitudes towards consumption of beverage alcohol combined with

tangible increase in per capita disposable income and most importantly willingness of young
consumer to spend, all point to the healthy growth prospects for the industry.

The industry has also to cope with a ban on advertising thus depriving it one of the most
potent form of communication and brand building.

3
 McDowell and co ltd

IMFL (Indian Made Foreign Liquor)

The IMFL industry in India is growing at about 14% per annum. Imported brands account for
about 1.5% of the total consumption.

Consumption is predominately towards whisky, which accounts for nearly 60% of the
market. High –end consumer price, due to high taxation has caused downward shift towards
cheaper products in many categories.

Low per capita consumption, the high volume in the unorganized segment of the spirits
business with likely transition into the organized sector, the changing consumer perception of
the alcohol and the progressive regulatory changes are the key drivers to the growth of the
IMFL industry.

The irrigational policies adopted by the various governments towards the IMFL industry
have been a growth in the cheaper brands to the detriment of consumers.

The production and distribution of alcohol can be done only if they got the license for it from
the state government. In BIHAR, currently the distribution of the IMFL is carried out only by
the KSBC (BIHAR State Beverages Corporation), which is a state controlled body.

DISTILLERY INDUSTRY

In a distillery, the basic function is distillation and it is carried out with the help of highly
sophisticated distillation plant filled with automation equipment to produce high quality
alcohol, which is an integral part of the product. Molasses, which is waste product of sugar
industry, is being used for producing alcohol after fermentation. Continuous fermentation
techniques are used in distillery for maximum efficiency in producing alcohol. Every one (1)
ton of molasses yields around 250 liters of alcohol. From this, it is given that only about 60%
of the molasses is used for the production of alcohol and remaining 40% of the molasses is
considered as waste product or put to unproductive uses.

4
 McDowell and co ltd

1.2 COMPANY PROFILE

INTRODUCTION TO ‘THE UB GROUP’

The UB Group is an Rs.3000 group and largest Indian business house in the country. This is
one of the fastest growing industrial houses with over 400 companies worldwide and the
business interests spinning the entire globe. The group is the second largest spirits marketer
in the world after Diageo. UB is the undisputed market leader around 56% market shares in
India, both in the breweries as well as in the distilling segments. McDowell & Co, the
flagship of UB group is the largest spirit company in India mentions the turnover of McD
and how much it contributes to the group.

This group started as a single business and has transformed to operate a portfolio of activities
in a span of 5 decades under the charismatic leadership of late Mr.Vittal Mallya. The present
Chairman, Mr. Vijay Mallya, has infused it with further dynamism.

In a rare achievement for an Indian corporate, the UB spirits division has fourth largest after
acquiring Shaw Wallace they are second distilled spirit marketers in the world. The UB
group’s spirits division has earned a second global distinction by being ranked world number
four in the terms of the largest number of millionaire brands.

The high standards that UB sets for itself found recognition in the form of the best company
award from the Bangalore Stock Exchange.

UB group spirit division has got 35 distilleries in India. Its registered office and corporate
office is at Bangalore in India. With the Pondicherry unit being recommended for the ISO
9001 – 2000 certification, all units are now ISO certified. Besides distilleries and breweries,
UB shows its smart existence in other enterprises like chemicals and fertilizers,

5
 McDowell and co ltd

pharmaceuticals, resorts, hotels, electronic instruments, batteries etc. Recently air services
also added to the business i.e. KINGFISHER AIRLINES.

The group’s main focus and plan for future is to strengthen their position in the areas of
existing profitable operation and move towards consolidation of their competencies in the
emerging markets, thereby establishing as a service full industrial company in Asia Pacific
region

6
 McDowell and co ltd

MCDOWELL & Co.’s HISTORY

McDowell & Co was incorporated in the year 1898 on September 15 and acquisitioned to the
United Breweries in the year 1955. McDowell’s consolidated its position as the No.1
Company in the highly competitive Indian spirits industry.

McDowell is very much older than the distillery. Infact the company dates back to 1826,
when Michael McDowell in Madras founded it. It began as a trading company, importing
wines and spirits from the most famous European liquor houses of that time. Later in 1947 it
was taken over by Bathgale & Co, of Calcutta.

In 1951, McDowell became a prime acquisition of the United Breweries Group. Under the
able guidance of the founder of UB Group, Late Mr. Vittal Mallya the company became the
first to manufacture Indian substitute to foreign liquor.

A new term IMFL (Indian Made Foreign Liquor) was coined. Since then, McDowell has
been indisputable market leader as one of the largest fast moving consumer goods companies
in the country.

In the year1970’s McDowell & Co Ltd, extended its operation world wide, under Vittal
Mallya’s chairmanship. New units were set up and several manufacturing and marketing
units were taken over. The unit at Hyderabad began in 1971, goa in 1973, Hathidah in 1975.
United Breweries Ltd became the holding company of the entire group and the group itself
led the Indian Liquor business. They have representation in almost all means of liquor
industries.

In the mid 70’s, it seemed that an official prohibition drive would send the liquor business in
to tailspin. But convinced that the set back would not last, Vittal Mallya moved into
strengthening the groups even further units in Udayapur, Alwar, Mirgangi & Trichur were
acquired.

7
 McDowell and co ltd

The leadership is a legacy, which has been most remarkably reinvented and multiplied by his
son, the current Chairman of United Breweries Group.
Soon after his father’s death Vijay Mallya set the ground lines for the groups immediate
future. Its leadership in liquor, processed foods and plastics is being consolidated. And the
fact that he is one of the youngest chairman finds expression in the group’s entry into the
new exciting high technology business, pharmaceuticals, medical, electronics, etc and several
collaborations are on the anvil.

McDowell is the flagship company of the UB group spirits business; the company controlled
most of the total of market in the Indian spirits industry. The spirits division sold million
cases in each year and the company sold millions of cases through the acquisition of
Triumph Distilleries & Vintners Pvt Ltd, which manufactures and sells the popular Gilbey’s
range of IMFL in India and Herbertsons Ltd.

McDowell has featured for the fifth consecutive year in the advertising and marketing
magazine as one of the most admired marketing companies. Four out of five brands are
among top hundred selling brands in the world. The company has crossed the milestone of
bottling 35 million cases in 2003 – 2004. These milestones have been made possible by
continual investments by the company, on the one hand in brand development and on the
other in enhanced manufacturing facilities. While the brand imagery has created level of
expectations for products on the house of McDowell, it has been the companies constant
endeavor to ensure the products of high quality are delivered consistently from the most
efficient manufacturing source to the consumer.

McDowell now manufactures its product from nearly forty distilleries spread across the
country in which twelve are owned distilleries all of which are ISO 9002 certified. The group
units are ISO certified and the company is in the process of insuring quality and process
certification for contract bottling units as well. The company’s investments are being made
both in the manufacturing capacity and companies environment in which it operates through
safe discharge of effluents. Recently company invests more for manufacturing and effluent
treatment facility

8
 McDowell and co ltd

McDowell is professionally managed multinational company with thousands of employees

working in the production and marketing center. McDowell has scored high on parameters
such as keeping close contact with market and leadership through innovative product
launches and company has been leading efforts to protect its consumers.

The Board of directors headed by Dr Vijay Mallya manages the McDowell & Co. The
company has its registered and corporate office at 51, RICHMOND ROAD BANGALORE.
The Company has its production units in various states such as:

Andhrapradesh - Hyderabad

Goa - Goa

Bihar - Hathidah

Karnataka - Kumbalgodu

Uttarpradesh - Rosa

Rajasthan - Udaipur

Westbengal - Serampore

Madhyapradesh - Bhopal

Maharashtra - Nasik

Pondicherry - Pondicherry

West Bengal - Asansol

9
 McDowell and co ltd

HISTORY OF MCDOWELL & Co. IN HATHIDAH

Hathidah, a town 23 km north from the Barauni station, BIHAR .The Late Mr. Vittal mallya
ventured in the liquor manufacturing business. In 1958, the UB Group acquired the land for
the company and in 1959 February the foundation stone was laid down by the then Revenue
Minister Mrs. Gauriamma. In January 1961, the factory was inaugurated by the ministers of
BIHAR in the presence of Vittal Mallya, the former chairman.

The license of spirit division was accorder in the year 1959. The Hathidah distillery,
switched entirely to manufacturing when its first unit was commissioned in 1959, and went
in to production of Indian Made Foreign Liquor a year later. The first processing was bottlery
of IMFL like Whisky, brandy and dorville brandy. Grape processing and malt distillation
started in 1964. An exclusive portfolio of liquor brands has since followed from this
distillery, which continued to be loyal following today.

McDowell Hathidah was the first to start its ENA (Extra Neutral Alcohol) plant in India. It
was also the first to distill grape spirit from fresh grapes. Being the first manufacturing unit
of McDowell, all the new products and brands were originally launched from Hathidah. Now
the unit is capable of producing 22000 liters of Extra Neutral Alcohol and 7000 cases per
day.

In 1996the first product was launched that is McDowell brandy. It is a blend of French and
Indian grapes and spirit. In 1969, the Hathidah gave Indian whisky, Diplomat. Then in 1973,
McDowell’s no: 1 whisky arrived. It set the trend for whisky blends, including Bagpiper,
which almost instantly became the largest seller in its price category and national leaders in
each basement like largest selling brandy, light bodied whisky, semi-premium whisky.

McDowell premium whisky - the pride of Hathidah, was introduced in 1979 and the RARE
OLD CASK RUM in 1981. These, today have a place of pride among Indian whiskies and
rums, and compared most favorably with the best-known brands worldwide. Their
introduction was followed in the year 1983 with the launch of Diplomat Whisky re-blended

10
 McDowell and co ltd

and re-packed. In 1987 Scotch whisky named Vintage was bottled. During the period of
1990-1992 Celebration and Caribbean Rum were introduced.

The Hathidah unit was the first in the country to produce perfumery grade alcohol. At that
time it supplied the spirit to Lakme, Praline Paris, Cosme Mathais and Shahib Singh for
manufacturing of toilet preparation.

The Hathidah unit has a positive influence on the local village by improving the
infrastructure and lifestyle of the people around the factory. All employees in this unit are
among the best-paid employee in the entire districts. McDowell Hathidah is one of the
pioneering distillery units in India and the unit has bagged many laurels in its history of 45
years. It is no wonder keeping pace with the times is one of the main reasons for the success
of the group.

Board of Directors of the Company

The Board directors comprises a Chairman, Vice-Chairman a Managing Director and other
three Directors.

1. Dr Vijay Mallya – Chairman

2. Mr. S.R.Gupta - Vice-Chairman

3. Mr.V.K.Rekhi – Managing Director

4. Mr.Doraiswamy Iyengar – Director

5. Mr.P.K.Kakodkar – Director

6. Mr.Brij Mohan Labroo – Director

11
 McDowell and co ltd

VARIOUS DEPARTMENTS’ FUNCTIONING AT McDowell & Co.

Mc Dowell & Co. Ltd comprises of various departments. Each has its own functions and is
controlled by an efficient and qualified management. The various departments are :

• PERSONNEL & ADMINISTRATION DEPARTMENT

• FINANCIAL &ACCOUNTS DEPARTMENT
• PRODUCTION DEPARTMENT
• STORES & PURCHASE DEPARTMENT
• COMMERCIAL DEPARTMENT
• QUALITY CONTROL DEPARTMENT

PERSONNEL & ADMINISTRATION DEPARTMENT

This is the most complex one among all the departments. Personnel department carries out
all the functions such as recruitment, training and discussion for welfare activities of the
employees. The personnel department is headed by Executive Personnel& Administration.
The department deals with the important decisions and policy making functions such as
salary administration, appointment, promotion and demotion, and maintaining good
industrial relation between employees and employers.

As far as industrial relation is concerned trade unions exist and the company enters in to
long-term agreement with the representatives. There is no fresh recruitment in this company.
Recruitment of workers is through the VRS of existing employees, so outsiders are not
worked permanently but lot of contract workers are worked daily. Training is given to new
employees. It is given for a period of one year. After the training programme the employees
are able for achieving the organizational goals.

12
 McDowell and co ltd

Labour welfare activities are indispensable for the running of an industry. Adequate welfare
creates commitment and the employees will care for their job more if they feel that they are
cared properly. The company is keen to the welfare of its employees. Full fledged canteen
facilities and opportunities for recreation activities are present. The company has contributed
substantially for the smooth functioning of Employee’s Cooperative Society and Welfare
Fund. The company provided various allowances to its employee. The remuneration
provided to the employees are on the basis of time rate system. The attendance of the
company must be kept in muster roll and the personnel officer must check the muster roll.

FINANCIAL DEPARTMENT

Finance is the lifeblood of the business; hence finance department is a very vital part of the
firm. The department deals with all the financial and accounting aspects of company affairs.
The function of this department is recording, classifying & summarizing in a specified
manner and in terms of money transaction and events, which are the part of financial
character.

Financial manager heads the department. The company has to send a weekly report to the
head office on how much money is received and how much money has been used. The
financial manager controls this process of report preparation and sends it to head office.
According to this report the head office sends the required fund to the company. The
company is able to adjust with available funds.

Accounts manual

The accounts of the company has maintained from its inspection under the sound system of
double entry bookkeeping. The company followed the computerized accounting system. All
the duties of the firm should be entered in to the computer. Everyday the company collected
the financial data from each department for smooth functioning of the financial department
and each department of the company.

13
 McDowell and co ltd

PRODUCTION DEPARTMENT

This is divided in to two separate departments namely distillation plant and the IMFL bottler.

A manager heads this distillation plant. Here water treatment pump house boiler termination
takes place. 20000 liters of ENA is produced on a daily basis, which is hardly sufficient for
IMFL production. This plant is fully controlled by instrumentation and computers.

In the IMFL bottlery, the bottling of liquor takes place. It is a large hall with bottles running
through different stages starting from washing to the final packing in to cartons.

Finished goods are stored in excise bonded warehouses from where dispatch takes place after
the completion of the excise formalities.

Production process

Fermentation

The main raw material used in the distillation plant is molasses. Molasses is a dark syrup
liquid, which is a waste from sugar industry in which contains 40 to 45% sugar. The
molasses received is first stored in storage tanks for a definite period of time. This is then
fermented after adding a measured quantity of yeast in fermentation tanks. The wash
obtained is then pumped into an overhead tank. This wash is then distilled in distillation
columns to extract ENA, which is base for different varieties of IMFL.

Distillation
The fermented material is pumped to distillation unit. In Hathidah unit, multi pressure
distillation system is used for distillation. It was the first fully instrumented distillation plant
in India. By steaming, impurities are removed and alcohol is distilled.

Maturation

14
 McDowell and co ltd

The malt spirit is unfit for blending as the spirit is raw. To remove rawness the spirit is
matured in wooden barrels or vats. During maturation oxygen penetrates through wood and
oxidizes the impurities. At the same time some favour components are extracted from the
wood. Oak wood is used for making cask and Sal wood for vats.

Blending

Blending is the mixing of spirit s in different strengths. The ingredients are ENA, the high
bouquet spirit, caramel, food flavour and demineralized water. After mixing these ingredients
in the perfect strength, the liquor is then filtered through sparkler filters and kept ready for
bottling. Once the blend is ready a sample is drawn for chemical examination by the excise
authorities and allowed to bottle only after getting the sanction from the government
chemical examiner.

Bottling

• Bottling involves;
• Washing
• Filling
• Capping
• Sealing
• Labeling
• Packing

The bottles are washed in machines, and are checked for cleanliness and for alkalinity at
random by the line chemist. The washed bottles move on a conveyor of the filling points
where the bottles are filled by machines in the adequate quantity. The filed bottles are capped
on line and then sealed with the sealing machines. It is labeled with the aid of labeling
machine and finally packed in carton.

15
 McDowell and co ltd

MAINTENANCE DEPARTMENT

Manager heads the department. This department has an electrical and mechanical workshop
maintaining all the electrical equipments of the factory. This department has a team of
trained and experienced technical personnel to handle the overall maintenance of machines,
boilers, pumps and generators.

STORES AND PURCHASE DEPARTMENT

Stores department is concerned with the storing of raw materials, stores engineering goods,
and stores finished goods. The finished goods are stored in the warehouse.

There are two stores functioning in the company and both of these are fully computerized.
They are

• RAWMATERIAL STORE
• ENGINEERING STORE

The purpose of store keeping is, smooth flow of incoming material to the concerned
department at the correct time and in sufficient quantity. Proper recording of inventory
received and supplied are maintained with the help of computer. This enables the storekeeper
to procure the store at current time, so that the working of the plant and machinery is never
hampered for the want of raw materials and spare parts. Generally 15 days stocks are always
stored in the anticipation of any future shortage.

Warehousing

The finished goods are stored in the warehouse of the company under the direct supervision
of the excise department of the government of BIHAR. The warehouse situated in the
company can accommodate 80,000 to 1,00,000 cartons of finished products. The warehouse
is capable of handling goods for the dispatch to various destinations.

16
 McDowell and co ltd

Purchase department

bbThe purchase manager organises and manages all the activities relating to the purchase of
goods to be sold by the sales department is called upon to purchase the right type of goods at
right time from right suppliers at the right place.

COMMERCIAL DEPARTMENT

This department is concerned with dispatching the goods according to orders and making
available various permits taken from the excise authorities posted in the distillery. Bihar
State Beverage Cooperation issues permit as per the request of the company. Request is
made on the basis of production.

QUALITY CONTROL DEPARTMENT

Company’s motto is “Quality is our most important product”. The production and quality
control personnel’s work hand in hand to maintain the quality. With this end in view,
vigorous checking of all raw materials and finished goods are enforced which pays a very
good dividend.

The quality control laboratory is fully equipped with the most modern instruments to analyse
and ascertain the quality of the incoming raw materials, water and various other ingredients
used for production.

Effluent Treatment Plant

ETP is working as per the norm of the Bihar state pollution control board. The waste
generated from the alcohol distillation plant i.e. spent wash is a potent organic pollutant. It
will destroy aquatic life. By the implementation of ETP the company is contributing much to
the economy substituting the economy substituting the cost of petroleum grade by methane
generated from the process for burning their boilers A supervisor heads the department.

17
 McDowell and co ltd

1.3PRODUCT PROFILE

PRODUCTS FROM MCDOWELL &CO LTD (HATHIDAH)

BRANDY
No. 1 McDowell brandy
• Ceaser Brandy
• Honey Bee Brandy
• Golden Bee Brandy
• Golden Amber Brandy
• VIN Grape Brandy
• Rich Richard Brandy

• WHISKY
• Single Malt Whisky
• Signature Whisky
• Premium Whisky
• Vintage Classic Whisky
• No.1 McDowell whisky
• Diplomat Whisky

• RUM
• Old Cask Rum
• Celebration
• Tiger Rum
• Ruby Rum
• Bagpiper

18
 McDowell and co ltd

1.4 OPERATIONAL CONCEPT

INTRODUCTION TO INCENTIVE SCHEME

Today labour plays an important role in the successful functioning of any organization. So
the pay package is one of the obvious and visible expressions of the employment
relationship; the main issue in the exchange between employer and employee, expressing the
connection between the labour market, the individual’s work and the performance of the
employing organization itself.

Compensation or pay is one of the most important of the staffing function. Workers must be
compensated for their efforts to satisfy their physical and social needs. It is the best method
of attracting the employees to get the work done. This motivates them for better
performance. Employee compensation should be fair both to employer and employee.

As a student of HRM, I have taken up the study to know the effectiveness of the incentive
scheme offered by the company.

“Incentive means that which incites or has a tendency to incite action”

-George R Terry.

An incentive scheme is a plan or program to motivate individual or group performance. An

incentive plan is to increase the productivity of workers by encouraging them or motivating
them to bring out the best in them. An incentive could be, therefore, either be monetary
benefits in the form of cash, bonus system or non-monetary benefits like promotion plans,
training schemes etc. Monetary incentive is more important than non-monetary incentive.

In the late 1800s Frederick Taylor popularized the use of financial incentive- financial
rewards paid to workers whose production exceeds some predetermined standard. The main
principle is to reward an efficient worker and penalise the inefficient ones. As a supervising

19
 McDowell and co ltd

employee of the Midvale steel company, what especially intrigued him was the fact that
some of these same employees still had the energy to run home and work on their cabins,
even after a hard 12-hour day. Taylor knew that if he could find some way to harness this
energy during the workday, huge productivity gains would be achieved.

OBJECTIVE

• The major objectives or of incentive scheme are: -

• To increase the volume of production.

• To improve the quality of product.

• To increase the efficiency of staff

• To reduce the absenteeism in staff

• To raise the morale of staff.

CLASSIFICATION

• Incentives can be classified in to

• Financial or monetary incentives

• Non-financial or non-monetary incentives.

20
 McDowell and co ltd

Financial incentives mean to induce the workers to work hard by offering them the reward
for extra work in terms of money; financial incentive is more important than non-financial
incentive.

INCENTIVES OR PAY FOR PERFORMANCE PLANS

• Piecework plans
Piece work plan is a direct productivity based compensation system in which an employee is
paid for each unit of production.

• Standard hour plans

Standard hour plan is time based compensation system where the wages are directly
calculated on the amount of time worked.

Team or group variable pay incentive plans.

Variable pay is different from individual incentive plan or programmers. Variable pay refers
to any plan, usually a group plan that ties pay to productivity or to some other measures of
the firm’s profitability. In other words, a true variable pay plan must group, team or company
oriented. On the other hand gain sharing plan and organization wide profit sharing are
variable pay plans.

INCENTIVE FOR MANAGERS AND EXECUTIVES

Short term incentive – the annual bonus

Bonus is an extra payment to the workers beyond the normal wage .Bonus is a share of a
workers in the prosperity of workers of an organization. it is treated as a source of
bridging the gap between actual wage and the need based wage Long term incentives or
capital accumulation programmers – stock options.

21
 McDowell and co ltd

INCENTIVES FOR SALES PEOPLE

Salary plan
Salary plan is a plan where the payment that is consistent from period to period despite
the number of hours worked. It can said that the direct remuneration paid to an employee
for compensating his service to organization.

Commission plan
Combination plan is a compensation computed as a percentage of sales in units or rupees.
In this sales people receives a percentage of the value of sales made.

Combination plan
Combination plan means salary plus commission plan. It is most frequently used for the
method which combines the stability of a salary with the performance aspect of a
commission. A common split is 80% salary and 20% commission.

INCENTIVES FOR OTHER PROFESSIONALS AND EMPLOYEES

Merit pay
It is also called task or skill based pay. Compensation is paid for the skills of employees who
are more versatile and have continued to develop their skills through cross functional
training.

22
 McDowell and co ltd

ORGANISATION WIDE VARIABLE PAY PLANS

Profit sharing plans

These are the plans where it distributes a portion of the profit of the organization to
employees

Employees stock ownership plan

It is a plan where by employees gain stock ownership in the organization for which they
work.

Gain sharing
Gain sharing programmers are organization wide pay plans designed to reward employees
for improvements in organizational productivity. It includes employee suggestions and
participation.

Any incentive plan is more likely to succeed if implemented with management support,
employee acceptance and a supportive culture characterized by teamwork, trust and
involvement at all level.

WHEN TO USE INCENTIVES

• When employees are unable to control quantity or output, pay based on time
may be more appropriate.

• When delays in the work are frequent and beyond employee’s control, it is
impractical to tie worker’s pay to their output.

23
 McDowell and co ltd

• Most incentives are given for the quantity rather than the quality of output.
When quality is a primary consideration pay based on time is often more
appropriate.

• When employees are attracted to the other outside opportunities

INCENTIVE SCHEMES IN MCDOWELL& CO LTD

Management of McDowell & Co Ltd and unions entered into a long term on 1-3-2000. This
agreement includes an annexure on production incentive scheme for workmen / staff
members. Before this agreement the company had a production bonus system. At that time
plant capacity was 8000 liters per day. Previous agreement was based on annual production.
Workers had claim for production bonus only if the annual IMFL for production during the
calendar year exceeds 4.5 lakhs of cases.

ENTITLEMENT OF PRODUCTION BONUS

a) For annual production upto 4.5 lakhs - nil

b) For every 10000 cases produced

between 4.5 lakhs to 4.8 lakhs - 1% of total salary

c) For every 10000 cases produced

between 4.8 lakhs to 5 lakhs - 1.5% of total salary

d) For every 10000 cases produced

between 5 lakhs to 5.2 lakhs - 2% of total salary

e) For every 10000 cases produced

between 5.2 lakhs to 5.4 lakhs - 3.5 %of total salary

24
 McDowell and co ltd

f) For every 10000 cases produced

between 5.4 lakhs - 4% of total salary

The above bonus was provided to workers along with the annual bonus.

Later a new plant was installed in the company. Plant capacity then raised to 20000 liters per
day. The expected production bonus system was placed by the present production incentive
scheme. Present incentive scheme covers both the categories of employees in the company
namely general and the bottlery. The employees in bottlery are entitled with a higher
percentage of incentive than the general category. As the process in the bottlery is a sort of
chain work, employees in the bottlery receive the same percentage of incentive. The
incentive is calculated only on the basis of actual production accounted in the warehouse
except production taken during the overtime. Incentive payment is calculated on a monthly
basis as per the agreed formula and it is paid once in 3 months.

The calculation of production incentive is worked out as follows:

Production incentive%

General / staff Bottlery

a) Monthly production up to
64999 cases Nil Nil

b) Monthly production of
65000 cases of finished
IMFL products in cases 40.00% 47.25%

25
 McDowell and co ltd

c) Between 65001 & 70000 c/s 1.4% 1.85 % for every 1000cases

d) Between 70001 & 75000 c/s 0.80% 1.85 % for every 1000cases

e) Between 75001 & 80000 c/s 0.80% 1.85 % for every 1000cases

f) Between 80001 & 87000 c/s 0.80% 1.85 % for every 1000cases

g) Between 87001 & 100000 c/s ` 0.92% 1.50 % for every 1000cases

h) 100001 cases & above 0.65% 1.20 % for every 1000cases

In case the production level is in between the incentive will be paid on the actual no of
finished IMFL cases and payments will be made proportionately. Even though the minimum
production for becoming eligible for incentive is 65000 cases per month, and amount of Rs
550 is paid to the bottlery employees and an amount of Rs 470 is paid to general staff
employees in permanent category for full attendance. When the production id between 55000
cases and 64999 c/s. subject to the following conditions.

a) The said payment will not be given if the fall in production from
65000 c/s. is due to non co operation in any form from the part of workmen, unexpected
suspension of operation, cessation of bottling and / or ENA plant activities due to extraneous
reasons like harthal/ bandh etc.
b) If for any reasons, what so ever production false bellow 55000 c/s. in a
month the said payment will not be made
c) The said payment will not attract statutory or other benefits except
ESI.

26
 McDowell and co ltd

ORGANIZATIONAL STRUCTURE:

HEAD DISTILLERY

Sr. Conf Secy Distillery Manager

Head Head Head Head – Prdn 1

Finance Commercial ETP Supdt – Prdn 1
&
Accounts

Head Head Head Head

Head Stores Bottling QC Maintenance
P&A &
Purchase

Officer - 2 Supdt Officer QC Jr. Officer

Bottling Maint
-2

Jr. Officers - 2 Jr. Officers - 2

Officer Jr. Officers

Jr. Officers - 3 Bottling - 2

Staff - 2 Staff - 2 Staff - 2 Jr. Officer Staff - 1 Staff - 2

Maint - 1

Staff - 4 Staff - 3

Systems

27
 McDowell and co ltd

Information systems

At McDowell’s, all employees are communicated of the recent development of the industry,
health, safety, discipline and also the changes in the statutory legislations by wide notice
which is displayed on the notice board. The media of communication used by the
organizations are magazines or journals, employee’s papers, notice boards, UB Group
journal etc. In the Organization’s a system known as suggestion system is introduced in order
to know the views of the employee’s staff etc. monthly meeting are held with trade unions.

Internal Control Systems

The Company has a robust system of internal controls which have been incorporated into
their enterprise-wide SAP system.

Additionally, checks on the system are carried out throughout the year by a network of
independent auditors at branches, the Company’s own operations review team, and is also
subject to review by the UB Group Internal Audit Department.

Financial system:

The accounts of the company has maintained under the sound system of double entry
bookkeeping. The company followed the computerized accounting system. All the duties of
the firm should be entered in to the computer. Everyday the company collected the financial
data from each department for smooth functioning of the company. The financial manager
controlled the process of preparing report and send to the head office

2.2 SWOT ANALYSIS

28
 McDowell and co ltd

What is swot Analysis?

SWOT analysis is a tool for auditing an organization and its internal and external
environment environment. It is the first stage of planning and helps marketers to focus on
key issues.

A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths (S)
or weaknesses (W), and those external to the firm can be classified as opportunities (O) or
threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis

The SWOT analysis provides information that is helpful in matching the firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT analysis fits
into an environmental scan

Simple rules for successful SWOT analysis

• The organization should be realistic about its strengths and weaknesses.

• Analysis should distinguish between where the organization is today, and where it
could be in the future.
• Organization should be specific in its approach towards what they do.

Organization should always embrace competition analysis. i.e. where they stand in relation
to its competitors.

It is not simply enough to identify the strengths, weaknesses, opportunities, and threats of a
company. In applying the SWOT analysis it is necessary to minimize or avoid both
weaknesses and threats. Weaknesses should be analysed to convert them into strengths.
Likewise, threats should be converted into opportunities. Lastly, strengths and opportunities
should be matched to optimize the capacity of a firm. Applying SWOT in this fashion can
obtain leverage for a company (Marketing Strategy, 1998).

29
 McDowell and co ltd

As can be seen, SWOT analysis can be extremely beneficial to those who objectively analyze
their company. The marketing manager should have rough outline of potential marketing
activities that can be used to take advantage of capabilities and convert weaknesses and
threats.

However, at this stage, there will likely be many potential directions for the managers to
pursue. Due to the limited resources that most firms have, it is difficult to accomplish
everything at once. The manager must prioritize all marketing activities and develop specific
goals and objectives for the marketing plan (Contemporary Marketing, 1992)

Strength and weakness of McDowell & Co.

Strength

 This location has several advantages to offer like water supply, resources, logistical
advantages etc.
 The number of employees in the company is not too large. This results in maintaining
good management – employee relationship and also managing the company becomes
easier.
 The current production can be increased further by improving the existing capacity of
the distilling plant. This provides the distillery the capability to handle peak and
fluctuating demands.
 As discipline is maintained in and outside the company premises, the company runs
in a smooth manner without many problems.
 Training is given to both the workers and the officials. This gives them an awareness
of the rules and procedures, to guide their behaviour. Besides, training results in
quality improvement, fulfillment of future personnel needs, improves health and
safety and helps to increase productivity.
 The Company has a robust system of internal controls which have been incorporated
into their enterprise wide SAP system.

30
 McDowell and co ltd

 Continuing investment in modernization and upgradation of manufacturing facilities

and investment in stocks of special spirits will ensure the delivery of superior quality
and value to the consumers.

Weaknesses

 The profit of the company depends upon the abkari policy which is decided by the
state government.
 The enhancement of excise duty affects production and marketing of the products.
 The raw material, which is used for production of liquor, is molasses and this is
brought from other states. So there is high transportation cost
 As per the present policy of the government does not allow the company to advertise
its products in medias; these advertisements are done in a disguised manner. This
hampers the brand building exercise to a large extent.

Opportunities

Increased exposure to the western culture of the consumers.

 Urbanization of the modern youth.

Changes in the mindset of the public about liquor consumption

 Huge untapped market.

 Low per-capita consumption compared to the global average.

 Conversion opportunities from the unorganized spirit segment.

 Two Third of India’s population is under the age of 35, the major consumption group.

Threats

31
 McDowell and co ltd

 Possibility of the giant foreign players entering the home market.

 Increasing presence of the global players on the home turf.

 Over taxation and over-regulation of the production and distribution.

 Competition from lower priced segments.

 Lowering of the import tariffs on spirits by the Indian govt. as a result of the WTO
agreement.

 Rising input costs.

DESIGN OF THE STUDY

32
 McDowell and co ltd

NEED FOR THE STUDY

To analyze the prospects of incentive scheme given in industry and its

impact on efficiency of staff and the bottlery workers.

3.2 STATEMENT OF PROBLEM

The problem for the present study has been designed as follows:

“A study on The Effectiveness of Incentive Schemes”

3.3 OBJECTIVE OF THE STUDY

PRIMARY OBJECTIVE:

• To evaluate the effectiveness of incentive scheme offered in the

organization

SECONDARY OBJECTIVE:

 To understand the labour management relationship.

 To study the relationship between the incentives provided and the productivity.

 To study the history, growth, &development of the company.

33
 McDowell and co ltd

3.4 METHODOLOGY OF RESEARCH

SOURCES OF THE DATA

All personnel researchers can tap two sources of data for investigation viz-internal source
and external source. Facts and figures are raw materials with which a research works.
Information available within the organization of study is known as internal data, which are
inexpensive to collect. All other sources of information are external sources of data; the
sources of information are also often referred to as primary and secondary data.

PRIMARY SOURCE

Primary data is personally developed and gives the latest information. They are not published
source of data and have to be created. The process of primary data collection is highly time
consuming and involves high cost. But it offers accuracy and reliability. The data is gathered
specifically for the problem of study.

SECONDARY SOURCE

Secondary data are published or semi-published data. They are cheaper source of data and
the unit of cost of information is very low. They are reality available for processing and
saves time. The entire preliminary investigation is based on secondary data. Data regarding
the profile of the organization has been collected from different source like journals,
company files, and by holding discussions with personnel manager.

34
 McDowell and co ltd

SAMPLE DESIGN

SIZE OF SAMPLE

Sample size for bottlery employees is 100 and for general staff category is 50

SAMPLING PROCEDURE

Deliberate sample techniques were adopted. In this method of sampling, samples were taken
on deliberate selection of particular units of universe. Deliberate sampling is known as
purposive or non- probability sampling.

COLLECTION OF DATA

While deciding about the method of data collection the researcher would have to decide
which sort of data he would be using for his study and accordingly the data collection would
be adopted. There are two sources of data, viz, primary and secondary data as explained
above.

ANALYSIS OF DATA

The data collected were analysed through tabulation, simple percentage method and
correlation analysis.

TOOLS AND TECHNIQUES FOR DATA COLLECTION

This part presents the tools and techniques adopted for field study, the measurement concepts
and statistical procedure employed for the analysis of data collected. The tools and
techniques are: -

35
 McDowell and co ltd

PILOT STUDY

 Firstly, a pilot study was conducted to estimate the feasibility of the study. This study
was conducted for one week, which played a major role in defining the overall
environment of the company as well as mental attitude of the company of the
employees in the company.

 CONSTRUCTION OF THE QUESTIONAIRES

 Questionnaires were designed in clear-cut form to get information about the impact of
incentive scheme. The questionnaires were framed in order to get full information
covering both the categories of employees namely bottling and general staff. It
contains both open end and close end questions.

 RESEARCH PROBLEM

 The problem was to study the effectiveness of incentive scheme offered by the
company.

 RESEARCH DESIGN

 Research design used is descriptive research where the researcher defines clearly
what he wants to measure and must find adequate means to clear specification of
what, who, when, where, why and how aspects of research. In this method statistical
research design is used, as the research includes percentage, correlation and other
tools like questionnaire schedule and observations in the research study.
SAMPLE DESIGN

 Sample size for bottlery employees is 40 and for general employees is 20.Delibrate
sample technique was adopted

36
 McDowell and co ltd

SOURCES OF DATA

 The primary data was collected from officials, employees and through practical
observation. Questionnaires were prepared for both bottlery employees and general /
staff category and data was collected from simultaneous interviews and observation.

 Secondary data collected from office records, magazines and documents available in
the organization and also through company websites. The data collected were
analysed through tabulation, simple percentage and correlation analysis.

3.5 SCOPE OF THE STUDY

The research study was confined to staff and workers of McDowell and company Ltd,
Hathidah.

The research study is conducted to identify the effectiveness of incentive scheme offered to
the bottlery employees and general staff in the organization. This project also helps one to
understand the functioning of various departments in the company.

Various analysis are made and necessary suggestions and recommendations were given
relevant to the conditions prevailing in the organization. The findings and suggestions from
this study would help the company to frame a suitable incentive scheme for the better
operation.

37
 McDowell and co ltd

RESEARCH DESIGN

INTRODUCTION TO RESEARCH

Research means a systematic investigation. The word itself suggests re-examination. It is a

quest for knowledge. Research may be defined as a process of knowing new facts and
verifying old ones by application of scientific methods to a natural or social phenomenon.
According to Dale Yoder, “Research is a shortcut to knowledge & understanding which can
replace the slower, more precious road 0f trial and error in experience”.

INTRODUCTION TO RESEARCH DESIGN

A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.

RESEARCH DESIGN FOR DESCRIPTIVE STUDIES

Descriptive research design is one that simply describes something such as demographic
characteristics of groups, community or people. Descriptive research is used when the
purpose of study is –

• To estimate the proportion of the people in a specified population who behave in a

certain way.

• To make specific predictions

• To determine whether certain variables are associated.

38
 McDowell and co ltd

Descriptive are formal and rigid in nature. A descriptive study requires clear specifications of
who, what, when, where, why and how aspects of research. The two basic types of research
designs used in descriptive research are: -

1. Case Research Study 2 .Statistical Research Study.

3.6 LIMITATION OF THE STUDY

 Due to the time constraints it was not possible to cover the entire universe .
 Limitations are imposed on the research by budget constraints.
 Fear about management lead employees to conceal real activities.
 The production process is of continuous type with three shifts. So the researcher
was able to collect data only from employees in the day shift.
 The study could have been made more elaborate, but it was confined to limited
number of respondents.

39
 McDowell and co ltd

Table 4.1

Gender State

Bottlery Employess

Gender No of Respondents % of Respondents

Male 29 73

Female 11 27

Total 40 100

40
 McDowell and co ltd

CHART-4.1

Male
Female

INTERPRETATION:
From the above ,we can see that 73% of respondents are male and 27% of the respondents
are female.

41
 McDowell and co ltd

Table 4.2
Gender State

General / Staff Category

Gender No of Respondents % of Respondents

Male 16 80

Female 4 20

Total 20 100

42
 McDowell and co ltd

CHART -4.2

INTERPRETATION:
From the above, we can see that 80% of respondents are male and 20% of respondents are
female.

43
 McDowell and co ltd

Table 4.3
Educational background of employees

Bottlery Employees

Qualification No of Respondents % of Respondents

Primary 4 10

Secondary 11 28

Pre degree 10 25

Degree 6 15

Post Graduation 2 5

Technical Qualification 7 17

Total 40 100

44
 McDowell and co ltd

CHART –4. 3

INTERPRETATION:
From the above, we can see that 10% of the respondents are primary educated, 28% of the
respondents are secondary educated, 25% of the respondents are pre degree, 15% of the
respondents are graduates 5% of the respondents are post graduates and 17% of respondents
are technically qualified. Majority of employees are secondary educated.

45
 McDowell and co ltd

CHART –4.4
Educational background of employees

General / Staff Category

Qualification No of Respondents % of Respondents

Primary 1 5

Secondary 2 10

Pre degree 3 15

Degree 9 45

Post Graduation 2 10

Technical Qualification 3 15

Total 20 100

Table4. 4

46
 McDowell and co ltd

INTERPRETATION:
From the above, we can see that 5%of the respondents are primary educated, 10% of the
respondents are secondary educated, 15% of the respondents are pre degree, 45% of the
respondents are graduates and 10% of the respondents are post graduates and the 15% of the
respondents are technically qualifed.Majority of staff category are graduates.

47
 McDowell and co ltd

Table 4. 5
Age Classification

Bottlery Employees

Age Groups No of Respondents % of Respondents

Below 30 Nil Nil

30 - 40 13 33

40 - 50 24 60

Above 50 3 7

Total 40 100

48
 McDowell and co ltd

CHART – 4.5

INTERPRETATION:
From the above we can see that the age below 30 is nil, between 30- 40 is 33%, between 40 –
50 is 60% and above 50 is 7%.

Table 4.6
49
 McDowell and co ltd

Age Classification

General/staff category

Age Groups No of Respondents % Of Respondents

Below 30 Nil Nil

30 - 40 8 40

40 - 50 9 45

Above 50 3 15

Total 20 100

50
 McDowell and co ltd

CHART –4.6

INTERPRETATION
From the above we can see that the age below 30 is nil, between 30- 40 is 40%, between 40 –
50 is 45%and above 50 is15%.

51
 McDowell and co ltd

Table-4.7

Table showing whether the employees are paid adequately for the
job they perform

Bottlery employees

Responses No of Respondents % Of Respondents

Yes 31 78

No 2 5

Sometimes 7 17

Total 40 100

52
 McDowell and co ltd

CHART –4.7

INTERPRETATION:
From the above we can see that 78% of the respondents are of the opinion that they are paid
adequately for the job they perform, and 5% of the respondents opposed it and 17% is not
sure about it.

Table 4.8

53
 McDowell and co ltd

Table showing whether the employees are paid adequately for the
job they perform

General/staff Category

Responses No of Respondents % Of Respondents

Yes 14 70

No 2 10

Sometimes 4 20

Total 20 100

CHART –4. 8
54
 McDowell and co ltd

INTERPRETATION:
From the above we can see that 70%of the respondents are of the opinion that they are paid
adequately for the job they perform and 10% of the respondents opposed it, and 20% of
respondents are not sure about it.

Table -4.9

55
 McDowell and co ltd

Table showing whether the incentive provided by the company

assist employee needs or not

Bottlery employees

Responses No. of Respondents % Of Respondents

Yes 27 68

No 3 7

Sometimes 10 25

Total 40 100

56
 McDowell and co ltd

CHART –4. 9

INTERPRETATION:
From the above, we can see that 68% of the employees are of the opinion that the incentive
provided by the company assist their needs, 7% of them oppose it and 25% of the employees
are not sure about it.

Table 4.10

57
 McDowell and co ltd

Table showing whether the incentives provided by the company

assist employee needs or not

General staff Employees

Responses No of Respondents % Of Respondents

Yes 12 60

No 2 10

Sometimes 6 30

Total 20 100

58
 McDowell and co ltd

CHART –4. 10

INTERPRETATION:
From the above, we can see that 60% of the employees are of the opinion that the incentive
provided by the company assist their needs, 10% of them oppose it and 30% of the
employees are of the opinion that incentives sometimes assists their needs.

59
 McDowell and co ltd

Table-11

Table showing whether the management creates any inequality

during the incentive determination

Bottlery Employees

Responses No of Respondents % Of Respondents

Yes 9 23

No 20 50

Sometimes 11 27

Total 40 100

60
 McDowell and co ltd

yes
no
sometimes

CHART – 11

INTERPRETATION:
From the above, we can see that 50% of the employees have the opinion that the
management creates no inequality during the incentive determination and 23% of the
employees find that there is inequality .

Table 4.12

61
 McDowell and co ltd

Table showing whether the management creates any inequality

during the incentive determination

General/staff category

Responses No of Respondents % Of Respondents

Yes 8 40

No 10 50

Sometimes 2 10

Total 20 100

62
 McDowell and co ltd

CHART –4. 12

INTERPRETATION:
From the above,we can see that 50% of the employees have the opinion that the
management creates no inequality during the incentive determination and 40% of the
employees find that inequality creates and 10% are not sure about it.

63
 McDowell and co ltd

opposed it and 20% of them have the opinion that the incentive scheme provided by the
company sometimes linked with the work been performed.

FINDINGS

1. BOTTLERY EMPLOYEES

Percentage analysis

 Majority of the employees are secondary educated and5% of them are

postgraduates.
 More than quarters of employees are between the ages of 40- 50.
 78% of the employees are of the opinion that they are paid adequately for the job
they perform.
 Majority of the employees find that the incentives provided by the company assist
their needs and 7% of them says that incentives do not assist their needs.
 50% of the employees are of the opinion that management creates no inequality
while incentives are determined and 23% of them find that inequality is created.
 Majority of employees are of the opinion that the incentive provided the link with
the work they perform and 13% of them are of the opinion that it is not so.
 80% of the employees claim that trade unions play a role in incentive determination
and a minority of employees is of the opinion that trade unions have no part in
incentive determination.
 About 63% of the employees are of the opinion that when compared to previous
production bonus system, present incentive scheme is very good and 15% of the
employees find it satisfactory and no one claims it is to be very bad one.
 Majority of employees are of the opinion that they are paid adequately for the over
time work performed.
 63% of the respondents are of the opinion that incentive offered by the company
helps in improving industrial relations.

64
 McDowell and co ltd

 50% of the employees claim that the management takes in to account their demands
while determining the incentives and 38% of the employees claim that their
demands are not taken in to account.

 Incentive scheme provided by the company creates inspiration to the work as

responded by 75% of the employees and 7% of employees are of the opposite
opinion.
 90% of the employees never use to neglect the quality of product while working to
meet a target.
 43% of the employees view that they are paid a portion of profit earned by the
company and 37% views that they are not paid so.
 Majority of the employees are satisfied with the incentive offered by the company
and 5% of them are dissatisfied.
 A gradual increase in the production and incentive paid can inferred

65
 McDowell and co ltd

2. GENERAL STAFF CATEGORY

Percentage analysis

 Majority of them are graduates and 5% of them are primary educated

 45% of the respondents are between the age of 40- 50 and 40% of them are
between 30-40 years of ages.
 Most of the employees claim that they are paid adequately for the job they
perform and 10 % are of opposite opinion.

 Majority of the employees find that the incentives provided by the company
assist their needs and 10% of them says that incentives does not assist their
needs.
 50% of the employees are of the opinion that management creates no inequality
while incentives are determined and 40% of them find that inequality is created.
 Majority of employees are of the opinion that the incentive provided the link
with the work they perform and 30% of them are of the opinion that it is not so.
 70% of the employees claim that trade unions play a role in incentive
determination and a minority of employees is of the opinion that trade unions
have no part in incentive determination.
 About 40% of the employees are of the opinion that when compared to previous
production bonus system, present incentive scheme is good and 30 % of the
employees find it satisfactory and no one claims it is to be very bad one.
 Majority of employees are of the opinion that they are paid adequately for the
overtime work performed and 20 % have opposite opinion.

66
 McDowell and co ltd

 75% of the respondents are of the opinion that incentive offered by the company
helps in improving industrial relations.
 50% of the employees claim that the management takes in to account their
demands while determining the incentives and 35% of the employees claim that
their demands are not taken in to account.

 Incentive scheme provided by the company creates inspiration to the work as

responded by 55% of the employees and 20% of employees are of the opposite
opinion.
 Only 30 % of the employees view that they are paid a portion of profit earned
by the company and 50% views that they are not paid so.
 Majority of the employees are satisfied with the incentive offered by the
company and 10%% of them are dissatisfied.
 A gradual increase in the production and incentive paid can inferred

67
 McDowell and co ltd

CONCLUSIONS

The study on “Effectiveness of incentives scheme offered” in McDowell and Co.LTD was
undertaken to find out the various impacts of incentive offered. The study reveals that The
effectiveness of incentive scheme in McDowell & Co is highly satisfactory, due in
consideration with the bottlery employees and general employees because majority of
employees find that the incentives provided by the company assist their needs and the
management does not differentiation. It has been found that proper appropriate incentive
scheme have led to betterment of industrial relation. Incentive has proved to be a motivating
factor in increasing the efficiency level.
It helps in reducing the absenteeism level of employees because the company is providing
the attendance bonus to the permanent workmen with the objective of improving attendance
habits. A successful incentive programme helps to increase the profit and also inspire staff
loyalty and raise morale.

68
 McDowell and co ltd

SUGGESTIONS AND RECOMMENDATIONS

McDowell and Co LTD is professionally managed company. The study reveals that majority
of the employees are satisfied with the present production incentive scheme offered by the
company. The yearly production itself shows the successful implementation of the incentive
scheme. Following are the some recommendations, which are considered to be beneficiary to
increase the effectiveness of the incentive scheme.

 The company should give a portion of the profit earned to the employees. It will
increase their interest in work and try to maximize the profit.
 The suggestion and recommendation regarding incentive determination, given by the
workers should be taken into consideration if it is worthy.
 The workers should be provided with enough flexibility and freedom in their job. It
will reduce the stress of employees.

 The company can take steps to introduce a suggestion system which is useful device
of communication with its employees. Rewards could also be offered for suggestions
which results in greater productivity and efficiency.
 Company can take steps to recruit candidate from outside the organization. Fresh
recruitment can provide new ideas in production process and can improve the
production incentive scheme.

69
 McDowell and co ltd

BIBLIOGRAPHY

 ORGANIZATIONAL BEHAVIOR – ASHWATHAPPA

• -Himalaya Publishing House, 5th Edition.

 ORGANIZATIONAL BEHAVIOR – STEPHEN ROBBINS

- Prentice Hall of India

 RESEARCH METHODOLOGY – KOTHARI C.R

o New Age Publications Pvt Ltd.

o New Delhi

o Fifth Edition

 WEBSITES: http// www.autherstream.com

- COMPANY JOURNALS & MAGAZINES

70
 McDowell and co ltd

Questionnaire for Employees

1. Name:

2. Sex:

3. Educational Qualification:

4. Age

5. Experience:

6. Average monthly incentive:

7. Are you paid adequately for the job you perform?

Yes No Sometimes

8. Does the incentive provided by the company assist your needs?

Yes No Sometimes
9. Does the management create any inequality during the incentive determination?

Yes No Sometimes
10. Does the incentive scheme provided by the company link with the work performed?

Yes No Sometimes

11. Do trade unions play a role in determining the wages and incentive?

71
 McDowell and co ltd

Yes No Sometimes

12. Opinion about present production incentive scheme compared with previous
production bonus systems.
Very Good Good satisfactory
Bad Very Bad

72