Professional Documents
Culture Documents
SCHOOL
MBA, Semester 1
AGENDA
1. 2.
Wage payment METHODS Theories for Incentives- Reinforcement & Expectancy Incentive Plans- Individual Vs. Group
3.
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Economical
Flexible Supported by workers and unions Motivating Prompt payment
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Methods of Remuneration
Payment by Results
Profit sharing
Co-partnership
T aylor system
Merrick system
Point schemes
Rowan scheme
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T owne plan
Rucker plan
Scanlon plan
Time wage system: A worker is paid on the basis of time spent on the work, irrespective of the amount of work done. Plus points Simple and easy to operate Guaranteed wages to workers Favoured by trade unions Good for precision jobs Minus points Makes no distinction between efficient and inefficient workers Offers very little to efficient workers Requires close supervision so that workers do not waste their time No relationship exists between wages and productivity
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Piece rate system: A worker is paid at a stipulated rate per piece or unit of output. This method is suitable where quality of work is not important, work is repetitive in nature, there is sufficient demand for output to guarantee continuous work and the job is a standardised one Plus points
Encourages efficient workers to produce more
Workers adopt better ways of getting things done, to earn more Idle time is reduced to the minimum Workers take every precaution to avoid machine breakdowns. Cost of supervision is less
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Minus points Delays beyond one's control could affect workers earnings adversely Beginners and slow learners are left behind in the race The focus on quantity would affect quality Workers may stretch themselves to unhealthy levels to earn more Encourages rivalry between workers
Taylor's differential piece rate system: A worker is paid more if he finishes the assigned task before the stipulated time. Merrick's differential piece rate system: This method uses threerates; up to 83%of the standard output workers are paid at the ordinary piece rate; between 83% to 100% at 110% of the ordinary piece rate and above 100% at 120% of the ordinary piece rate.
Incentive Plans
Reinforcement Theory
Expectancy Theory
Expectancy
If I attempt this level of performance, am I likely to succeed?
Instrumentality
If I achieve this level of performance, am I likely to be rewarded?
Valence
What value do I place on the rewards available to me?
Incentive Programs
Differ by
payment method frequency of payout ways of measuring performance choice of which employees are covered
DISCUSSION
Individual Vs. Group
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Types of Plans
Merit Pay Individual Incentives Profit Sharing Ownership Gainsharing Group Incentives Alternative Reward Systems
Bonuses
It is an incentive payment granted to a worker at the end of a particular year, in addition to ones normal standard wage.
Incentive Plans
Plan is clearly communicated. Plan is understood by employees and management. Bonuses are easy to calculate. Employees participate in administrating the plan. Employees believe they are being treated fairly. Employees believe they can trust the company and that they have security. Bonuses are awarded as soon as possible after the desired performance.
Fringe Benefits
These are extra benefits provided to employees in addition to the normal compensation paid in the form of wages or salaries.
Features
Supplementary forms of compensation Paid to all employees Indirect compensation, since they are not directly related to performance May be statutory or voluntary
Employee security
Hours of work
Paid holidays
Paid vacation
Retrenchment compensation
Lay off compensation Workmens compensation Legal aid Health benefits Educational Trans- Parties & Miscefacilities portation picnic llaneous
Pension
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