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You are on page 1of 44

Chapter-4

Motivational Strategies

Types of Incentives Schemes

Incentive

Schemes

Earnings vary in

The same proportion

As output

Earnings vary less

Proportionately

Than output

Earnings vary proportionately

More than output

Earnings differ at

Different levels of output

1.Straight

Piece Work

2. Standard

Hour

1. Hasley Plan

2. Rowan Plan

3. Barth Scheme

4. Bedaux Plan

1. High piece

rate

2. High standard

hour

1. Taylors

Differential Piece rate

2. Merrick Differential

Piece rate

3. Gantt task

System

4. Emersons efficiency

plan

1. Straight piece-work

Straight piece-work method is the oldest,

simplest and the most commonly used

method.

Here, the rate per unit of output is fixed,

and the total earnings of a worker arrived

at by multiplying the total output (

measured in terms of units) by the rate per

unit.

Example

If the rate per unit is 10 paisa and the total

output of an employee is 100 units, his or

her earnings will be

100 * 0.10= Rs.10.00

Extending the logic of the piece-rate

system, a worker has to go without wages

if he or she fails to turn out the required

goods.

For this reason, the system is modified in

one respect the workers time rate is

guaranteed.

2. Standard hour system

( 100 % gains sharing)

Standard

Hour system

Wages

Are not

guaranteed

Wages are

guaranteed

Example

(Wages Are not guaranteed)

Standard time = 10 hours

Rate per hour = Re 1

Case (i)

Time taken =8 hours

Earnings = 10*1= Rs.10

Example

(Wages Are guaranteed)

Standard time = 10 hours

Rate per hour = Re 1

Case (ii)

Time taken =12 hours

Earnings = 12*1= Rs.12

1. Hasley Plan

Standard time is fixed for the completion of

a job and the rate per hour is determined.

If the worker takes the standard time or

more to complete the job, he or she gets

paid at the time rate.

In other words, time wages are

guaranteed even if the output of the

worker is below standard.

When the work is done in less than the

standard time, he or she gets paid for the

actual time, at the time rate plus a bonus

which is calculated as at or as a specified

percentage of the saved time.

The percentage varies from 30-70 percent.

The usual share is 50 percent, the

remaining going to the employer.

Example

Standard time = 10 hours

Rate per hour = Re 1

Case (i)

Time taken =10 hours

Earnings = 10*1= Rs.10

Standard time = 10 hours

Rate per hour = Re 1

Case (ii)

Time taken =12 hours

Earnings = 12*1= Rs.12

Standard time = 10 hours

Rate per hour = Re 1

Case (iii)

Time taken = 8 hours

Earnings = 8*1= Rs.8 ( Time wages)

Bonus = *2*1= Rs.1

Total = Rs. 9

2. Rowan System

Standard time and rate per hour are fixed.

If the time taken to complete the job is

equal to or exceeds the standard time, the

employee is paid for the time taken at the

rate per hour.

If the time taken is less than the standard

time, the employee is entitled to bonus, in

addition to the time wages.

The bonus takes the form of a percentage

of the workers time-rate.

This percentage is equal to the proportion

of the saved time, to the standard time.

Example

Standard time = 10 hours

Rate per hour = Re 1

Case (i)

Time taken =10 hours

Earnings = 10*1= Rs.10

Standard time = 10 hours

Rate per hour = Re 1

Case (ii)

Time taken =12 hours

Earnings = 12*1= Rs.12

Standard time = 10 hours

Rate per hour = Re 1

Case (iii)

Time taken = 8 hours

Earnings = 8*1= Rs.8 ( Time wages)

Bonus = 2/10*8=Rs.1.6

Total =Rs. 9.60

3. Barth System

The barth system does not guaranteed the

time-rate.

The workers pay is ascertained by

multiplying the standard hour by the

number of hours actually taken to do the

job, taking the square root of the product

and multiplying it by the workers hourly

rate.

Example

Standard time = 10 hours

Rate per hour = Re 1

Case (i)

Time taken =12 hours

Earnings = 12*10 (square root)

= 10.95 * 1 = Rs. 10.95

Standard time = 10 hours

Rate per hour = Re 1

Case (ii)

Time taken =10 hours

Earnings = 10*10 (square root)

= 10 * 1 = Rs. 10.00

Standard time = 10 hours

Rate per hour = Re 1

Case (ii)

Time taken = 8 hours

Earnings = 8*10 (square root)

= 8.94 * 1 = Rs. 10.00

4. Bedaux Scheme

The standard time for a job is determined.

Each minute of the allowed time is called a point

or B.

Thus, there are 60 Bs in one hour.

Each job has a standard number of Bs.

The rate per hour is also determined.

The workers receives, in addition to his or her

hourly rate, a bonus which under the original

plan is equal to 75% of the no. of points earned,

in excess of 60 per hour, multiplied by one-

sixtieth of the workers hourly rate.

If a worker does not reach his or her

standard, he or she is paid at the time

rate.

Example

Standard time = 10 hours

Rate per hour = Re 1

Case (i)

Time taken =12 hours

Earnings = 12*1= Rs.12

Case (ii)

Actual time = 8 Hours

Earnings: Time wages = 8*1= Rs. 8

Bonus:

Standard Bs = 10* 60 = 600

Actual Bs = 8*60 = 480

Bs saved = 120

Bonus = 75/100*120*1/60 = Rs. 1.50

Total earnings = 8+1.5

= Rs. 9.5

1. The high piece rate and

2. The high standard hour

system

Under this, the earnings of the worker are

in proportion to his or her output, as in

straight piece-work, but the increment in

earnings for each of the output above the

standard is greater.

Example:- for each one percent increase

in output in earnings under the straight

piece-rate system.

Example

Standard time = 10 hours

Rate per hour = Re 1

Case (i)

Time taken =12 hours

Earnings = 12*1=12 hours

Increase in output=1.2*1*4/3=1.6

Total =13.6

1. Taylors Differential piece-rate

system

There is a low rate for output below the

standard, and a higher piece-rate for

output above the standard.

Differentials to be applied:

120% of piece-rate at or above the

standard

80% of piece-rate when below the

standard

Example

Standard output = 100 units

Rate per unit = 10 paisa

Differentials to be applied:

120% of piece-rate at or above the

standard

80% of piece-rate when below the

standard

Case (i)

Output =120 units

Earnings =120*120/100*0.10=

Rs.14.40

Case (ii) = 90 units

Earnings = 90*80/100*0.10=

Rs. 7.20

2. Merrick differential piece-rate

system

Is a modification of the Taylor system, with

three instead of two-rates.

So, as to encourage new and average

workers.

Straight piece-rates are paid up to 83% of

the standard output, at which a bonus of

10% of the time-rate is payable, with a

further 10% bonus on reaching the

standard output.

Differentials to be applied:

As the efficiency is more than 83% but

less than 100%,110% of the base piece-

rate applies

As the efficiency exceeds 100%, 120% of

the base piece-rate applies

Example

Standard output = 100 units

Rate per unit = Re 1

Case (i)

output =80 units

Earnings = 80/100*100 = Rs.80%

As the efficiency is less than 83%, only the base

piece-rate applies

80*0.10=Rs. 80

Case (ii)

Output =90 units

Efficiency = 90/100*100=90%

As the efficiency is more than 83% but less

than 100%, 110% of the base-rate applies

90*110/100*0.10= RS.9.90

Case (iii)

Output =110 units

Efficiency = 110/100*100=110%

As the efficiency is more than 100%, 120%

of the base-rate applies

110*120/100*0.10= RS.13.20

3. Gantt Task System

The worker is guaranteed his of her time-

rate for output below the standard.

On reach in the output or task, which is set

at a high level, the worker is entitled to a

bonus of 20% of the time wages.

For outputs above the task, high piece-

rates are paid.

Example

Standard output = 80 units

Time taken = 8 hrs

Rate per hour= Re 0.50

High piece-rate=Re. 0.10

Case (i)

Time taken =70 units

As the output is less than the standard, only time

wages are paid to workers

8*0.50=Rs.4.0

Case (ii)

Time taken =80 units

As the output is equal to the standard, the

worker is entitled to time wages plus 20%

of the time wages as bonus.

Time wages = 80*0.50=Rs.4.0

Bonus = 20/100*4=Rs0.80

Total earnings = Rs. 4.80

Case (iii)

Output earnings = 110 units

As the output is more than the standard,

the worker is entitled to a high piece-rate.

110*0.10= Rs. 11.00

4. Emersons Plan

A standard time is set for each job, and the

efficiency of each worker is determined by

dividing the time taken by the standard time.

Up to 67% of efficiency, the worker is paid by

time-rate.

Thereafter, a graduated bonus, which amounts

to a 20% bonus at 100% efficiency is paid to the

worker. Thereafter, an additional bonus of 1% is

added for each 1% efficiency.

Example

Case (i)

Standard output = 100 units

Rate per hour = Re 1

Case (i)

Output in 10 hrs = 50 units

Earnings

Efficiency = 50 percent

As the efficiency is below 67% the worker is

entitled to time wages only.

Earnings =10*1 = Rs. 10

Case (ii)

Output in 10 hrs = 100 units

Earnings

Efficiency = 100 percent

The worker is entitled to time wages plus

20% of time wages as bonus

Time wages =10*1 = Rs. 10

Bonus = 20/100*10=Rs.2

Earnings = Rs. 12

Case (iii)

Output in 10 hrs = 130 units

Earnings

Efficiency = 130 percent

The worker is entitled to time wages plus

20% of time wages as bonus

Time wages =10*1 = Rs. 10

Bonus = 50/100*10=Rs.5

Earnings = Rs. 15

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