Types of wage plans

Piece work

The most widely used incentive plan is piecework. Under this plan, the
number of pieces or units of work that are completed determine wages. Each
piece is given a prescribed value, which is known as piece rate. Rates are set
by time study and past experience on similar jobs. It is designed to provide
workers with an incentive to increase output.

Time rate

• Less harmful to quality

• Less harmful to health of employees
• Simple, easy to understand
• Does not provide incentive for increased effort.
• Required supervision of workforce
• Employers vulnerable to work to rule
• Sanctions by union

Piece rates

• Stimulates effort
• Encourage workers to devise improved methods
• Simplifies costing.
• Must be adjusted for local circumstances.
• Must be adjusted to take account of changes in method.
• Encourages workers to cut corners, endangering safety and quality