Labor Incentive Plans

Labor Incentive Plans

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TIME WORK SYSTEM

In this system labor is paid  on base of time worked. Total labour remuneration is sum of basic pay and overtime premium given. Basic pay is charged as direct labour   and overtime is charged as indirect labour

 Basic pay(Hrs Worked * Rate Per Hr)  =          XX

Overtime premium                                =        XX

____

TOTAL                                                     =     XXX

 

PIECEWORK SYSTEM

In contrast to old system labour is paid on basis on units produced

Wage= units produces *rate per unit

  • Uni rate scheme: same rate paid for all units produced
  • Differential rate scheme :different rate paid for units produced after certain limit to boost production level

 

Incentive schemes

Lets have a look on different  models to reward labour:

 

Taylor’s Differential Piece Rate System

Percentage of Efficiency                     Piece Rate

Less Then 100%                                    83% of Normal Piece Rate

Equal or More than 100%  125% of Normal Piece Rate

               

Merrick’s Differential Piece Rate System

Percentage of Efficiency                      Piece Rate

Upto 83%                                         Normal Piece Rate

Above 83% but upto 100%           110% of Piece Rate

Above 100%                                    120% of Piece Rate

 

 

Gantt’s Task & Bonus System

 

Combination of time & Piece Rate System

Percentage of Efficiency                               Piece Rate

Less then 100%                                     Guranteed Time Rate

Equal to 100%         Time Rate + 20% Bonus on time rate

 

 

Emerson’s Efficiency system of wage payment

 

Percentage of Efficiency                                      Piece Rate

Less Then 66.67%                                                 Guranteed Time Rate

Above Then 66.67% Upto 100%                        Time Rate + Increasing Bonus Based on Actual Efficiency

( From 0.01% to Maximum of 20 % On Time Rate)”

Above 100%                                                         “120% of time Rate + 1% Increase for every 1%

Increase in Output Beyond 100%”

 

               

POINT SYSTEM OF WAGE PAYMENT

1) Bedeaux Method                     (Basic + Bonus)

Basic       Hrs Worked * Rate PerHr

Bonus                                     75% of Points Earned * Rate PerHr

Points Earned                        Time Saved Expressed in terms of B (Bedeaux)

 

2)Haynes Method

Basic       Hrs Worked * Rate PerHr

Bonus                     Repeatitive Work        : 5/6 * Points Earned * Rate PerHr

Non-Repeatitive Work: 50% * Points Earned * Rate PerHr

Points Earned        Time Saved Expressed in terms of Manits( Man-Minutes)

 

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