System of Incentive payment

In more organisations, at present, the price - rate system is being replaced by

the time-rate system of wage payment. Therefore, workers are assured of
there hourly, weekly or monthly rate of specific rate. In order to take care of
production and productivity, however, many organisation, depend on their
needs, introduce to incentive schemes to motivate workers to putting in extra
efforts toward higher production and productivity. In return, they get a
higher wage over the above the guaranteed wages as per the time-rate
system. Incentive schemes can be both financial and non-financial. A non-
financial scheme tales the forms of giving certificates, trophies, publicity,
etc. In financial incentive scheme, workers are rewarded in monetary terms
against different level of productivity.

Following are the pre-requisites of introducing an incentive

scheme:-

1) There should be enough work necessitating extra effort to be put In by

workers to produce more.

2) There should be enough demand for the product so that the extra
products produce through the introduction to the incentive scheme are
sold in the market

3) Other method of improvement should have been exhausted to a

reasonable extent so that incentive payments accrue for a
commensurate amount of effort put in by the workers. Accordingly,
the production planning system, material handling, etc. , should first
be streamlined. Other reasons for delay should also be determined and
removed.