Presentation

on
Types of Incentive plans
(Earning vary less proportionately than output)
Standard Hour Plan
 Incentive Plans

 An incentives is something that motivates an

individual to perform an action.
 Incentive plans predict a basic rate usually on time
basis applicable to all workers & incentive rates
payable to the more efficient among them as extra
compensation for their meritorious performance in
terms of time, costs & quality. The incentive rates
may take the form of bonus or premium.
 Types of Incentive Schemes
Incentive Schemes

Earnings vary Earnings vary less Earnings vary Earnings differ

in the same Proportionately Proportionately At different
proportion as output than output more than output Levels of output
Taylor's
Straight Piece Halsey Plan High Piece Differential
Work Rate Piece Rate
Rowan plan
Standard Merrick
High Differential
Hour Barth Scheme
Standard Piece Rate
Hour
Bedaux Plan Gantt Task
System
Emerson’s
Efficiency
plan
 Halsey Premium Plan

This plan was originated by F A Halsey( an American engineer)

recognizes individual efficiency and pays bonus on the basis of time
saved.
Main features of this plan are:
 Standard time is fixed for each job or operation.
 Time rate is guaranteed & the worker receives the guaranteed wages
irrespective of whether he completes the work in the time allowed or takes
more time to do the same.
 If the job is completed in less than the standard time, the worker is paid a
bonus of 50% of time saved at time rate in addition to his normal time
wages.
Total Earnings = Time Taken* Hourly Rate + Bonus
Bonus = 50% of time saved (1/2*Time Saved*Hourly Rate)
EXAMPLE : If 8 hours is the standard time of a job, & Rs. 0.50 is the
guaranteed wage per hour, calculate wages of workers and premium
earned by them under different time saved slots ?

PREMIUM TOTAL WAGES Effective Hourly

(half of the time saved) (Rs.) Rate
(Rs.)
If the work is in 6 hours, 0.5 3.5 3.5/6 = 0.58
completed
in 4 hours,1.00 3.0 3.0/4 = 0.75
in 2 hours, 1.50 2.5 2.5/2 = 1.25
in 1 hour, 1.75 2.25 2.25/1 = 2.25

Wages under Halsey System = [Time taken * Time rate] + (50% of time
saved * time rate)
Effective Hourly Rate = Total Wages under Halsey Plan
Actual time taken
 Rowan Premium Plan

 The plan was introduced by D. Rowan in 1901

 Bonus paid to the employee is equal to the proportion of the time saved to
the standard time. Formula :
Bonus = Time Saved * Time taken * Hourly rate
Time Allowed

Total Earning = Time Taken * Hourly Rate + Bonus

Example :- Calculate the total earnings of a worker & the effectively rate of
labour wages per hour where payment of bonus is under the Rowan
scheme from the below mentioned particulars:
Basic wage rate per hour – $.10.80,
Time allowed for the job – 48 hours,
Actual time taken – 36 hours.
Answer
Total wages =
Normal time wage + Time saved/Time Allowed *Time taken* Time rate

Normal time wage = 36 hours @ $. 10.80 = 388.80

Bonus = Time saved/Time Allowed*(Time taken * Time rate)
= 12/48*(36*10.80)
= 97.2
Total Wage = 388.8 + 97.2 = 486
Effective hourly rate = $.486.00/36 = $. 13.50
 Bedeaux Plan

 It is combination of time and bonus scheme. Standard time

for a job is determine by time study.
 Under this plan, all operation or job is expressed in terms of
so many standard minutes, which are called ‘Bedeaux points’.
 Each B representing one minute through motion & time study.
Upto 100% performance,
 i.e., up to standard B's, a worker is salaried time wages
without any premium for efficiency. If the real performance
exceeds the standard performance in terms of B's, then 75%
of the wages of the time saved is salaried to the worker as
bonus and 25 % is earned by the foremen.
 Standard time for the job is fixed. Each minute of the
standard time is called a point or B. Each job has a standard
number of Bs. The worker receives bonus which is equal to
75% of the number of points earned, in excess of 60 per hour,
multiplied by one sixtieth of the worker’s hourly rate.
E.g. Std Time = 10 hrs
Rate per Hour = Rs.1
Actual time = 8 hrs
Earnings : Time Wage= 8*1 = Rs.8.00
Bonus:
Std Bs = 10*60 = 600
Actual Bs = 8*60 = 480
Bs Saved = 120
Bonus 75 120 1
100 60 = Rs. 1.50
Total Earnings = 8+ 1.50
= Rs. 9.50
 Barth Scheme
 It does not guarantee the time – rate. The worker’s pay is
determined by multiplying the standard hour by the
number of hours actually taken to do the job, taking the
square root of the product & multiplying it by the worker’s
hourly rate.

 Wages = Standards Time* Time Taken *Hourly Rate

 E.g.
 Std time = 10hrs
 Rate per hour= Rs.1

 Time Taken = 8 hrs

 Earnings = 8*10 *1
 = Rs 8.94