PRESENTED TO: Prof. Vaishali Trivedi

PRESENTED BY: Shruti Rana (B-40)

 The pay of manual workers is often influenced by

national and local agreements with trade union.

The objective of workers and their trade union is to strike a bargain with management about what they consider to be reasonable amount of pay that should be provided by the employer in return for their contribution.

a fair degree of choice by both buyers and sellers of where they obtain labour or where they provide it.  Local labour market is a fairly perfect market where there is a widespread and easily available knowledge of rates of pay and there may exist.2. . LOCAL LABOUR MARKET PRESSURES. demand for number of traditional skills has diminished. . TECHNOLOGY  Increased use of technology on shop floor.

TIME RATES  Rate varies with time. .  Time rates do not provide a direct incentive relating the reward to the effort or the results. never with performance. adverse working conditions and sometimes location.  Additional payments for overtime. shift working.  Employees feel that their earnings are predictable and steady and they do not have to engage in arguments with rate fixers about piece rate or time allowances. night work. call outs.

 These rates are higher than the minimum time rate and may contain a consolidated bonus rate element.High Day Rates. .

e. .PAY STRUCTURE  Time rates are paid in the form of spot rates i.  Spot rate may be designated for a different levels of skill. fixed rate for a job or an individual.  Spot rate may also be designated on the basis of job – different rates for different job..

INCENTIVE SCHEMS FOR MANUAL WORKERS Incentive schemes for manual workers consists of:  Payment by results (PBR)  Contingent pay schemes (performance related pay or skill based pay)  Collective schemes .

CONSIDERATIONS AFFECTING THE USE OF INCENTIVE SCHEMES Criteria of effectiveness:  The link between effort and reward is obvious and easily understood. .  The value of the reward is worthwhile in relation to the effort.  Individuals are able to influence their level of effort or behaviour in order to earn a reward.

 Rewards closely follow the effort.  The integrity of the scheme is preserved – it is not allowed to degenerate and cannot be manipulated so that individuals are over-rewarded. .

lower the cost of production and provide higher earnings for the workers concerned. .THE RATIONALE FOR INCENTIVE SCHEME:  People are motivated by money.  Yield increased output.  Less supervision is needed to keep output up.

RAW TIME: Productive time to perform each task in an operation.DEFINITIONS WAGE DRIFT: The tendency for the average level of wages paid to rise faster than official wage rates. This is due to increases in overtime. or upgrading of job descriptions. .

DISADVANTAGES OF INCENTIVE SCHEMES Incentive schemes can be:  Unfair  Ineffective  Penalize skill  Cause wage drift  Lead to management escaping its responsibilities  Costly to maintain .

 Produce strife in workplace  Create reluctance to exert the expected level of effort  Result in poor quality work  Lead to poor teamwork  Result in accidents and health hazards .

PIECEWORK 2. or to the time saved in performing each task. .  The incentive pay is then linked with the output achieved relative to the standard.PAYMENT BY RESULTS SCHEMES 1.WORK MEASURED SCHEMES  This scheme uses work-measurement techniques to determine standard output level over standard times for task.

 The form of work measurement used is time study. .  Jobs are broken down into their constituent parts or tasks and the time taken to complete each part is measured with a stop watch by a work-study or industrial engineer.  A number of measurements will be made of the time taken by different workers on the same task or the same worker carrying out the task at different times of the day and time.

 All the operator studied are given an effort rating relating to this standard. Individual effort is rated in terms of ‘ standard performance’.  The raw time observed in the work study are then adjusted by the work-study engineer to produce a basic time that represents a rating of 100 to indicate the performance of an average operator working conscientiously without financial motivation. .

personal needs. fatigue and any time regularly taken up by other aspects of work such as cleaning or resetting machines. .  The result is the standard time for the task. This basic time will be further adjusted to incorporate allowances for relaxation. usually expressed as ‘standard minutes’.

of units produced /day (132) × Std. minutes per unit (4) Actual time taken in minutes per day (48) = 528 × 100 = 110% 480 . Work measured schemes can use performance rating that are calculated by the formula: No.

.Drawback of work measured schemes:  Employees who are being timed may deliberately restrict their performance in order to achieve low standard times and therefore higher bonus with less effort.

. The amount of bonus depends upon the difference between the actual time taken to perform the task and the standard time allowed.Solution:  The PBR can be based on time saved principle. then the percentage of time saved is applied to the base rate to calculate the bonus.  If the task done is less than the standard time.

putting employees under the obligation to perform at the effort level required. MEASURED DAY WORK  Originally developed for large batch or mass production factories in 1950s and 1960s. pay of employees is fixed on the understanding that they will maintain a specified level of performance. .3.  Here.  Incentive is guaranteed in advance.

contribution to teamwork and ability to hit targets. PERFORMANCE RELATED PAY  Employees receive a high base rate and an additional performance-related payment. flexibility. which is either lump sum or consolidated into basic pay. .CONTINGENT PAY SCHEMES 1.  The performance can be either in terms of quality.

2. SKILL BASED PAY  This scheme rewards people with extra pay for acquiring and using additional skills. .


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