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8/7/2019 Types of incentive schemes lecture 2
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Archana Choudhary
8/7/2019 Types of incentive schemes lecture 2
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Applications of motivational
concepts :Job Designing :
has emerged as an important application area for
work motivation. job design concerns and approaches are usually
considered to have begun with scientific management.
The goal of such management was to maximizehuman efficiency in job performance.
The scientific management approach resulted in jobengineering, which focused on product and process,plant layout, human-machine interactions, etc.
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y Advances in technology, computer systems, etc., haveresulted in job specialisation.
y Even though specialization resulted in better control andefficiency, other aspects like motivation and satisfactionwere neglected.
y Consequently, over a period of time, efficiency decreasedand dissatisfaction prevailed among the work force.
y
The problems today are compounded with downsizing andincreased use of technology.
y For academicians as well as practitioners, job design takeson special importance as it reduces stress, enhancesmotivation, and results in satisfaction.
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Job enlargementy Job enlargement refers to expansion of the scope of job
horizontally. In simple terms, it means increasing the
number of tasks that need to be executed.y For example, it an assembly-line worker was inserting
100 nuts in a day, he would perhaps increase it byanother 50.
yThe variety that is experienced by the individual isonly in terms of the number of tasks. Some amount ofboredom may be relieved by this approach.
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Disadvantages of job enlargementy First, the workers need to be trained or multi skilled in
order to handle the variety of jobs.
y Maybe it requires a new way of functioning in analready existing system.
y Moreover, it may not be possible to introduce job-enlargement programmes for all the jobs in the
organization.
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Job enrichment :y The proposition of Herberg that motivators when present
enhance the motivational aspects of the individual findsits direct application in a job-enrichment programme.
y In enrichment, the job is enlarged vertically so that
there is greater variety of work content.
y It requires a high level of knowledge and skill, givesworkers more autonomy and responsibility in terms ofplanning directing and controlling their own
performance, and provides opportunities for personalgrowth and a meaningful work experience.
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Advantages of job enrichmenty Research has supported us with evidence that there is
more employee satisfaction, better customer service,
less employee overload, and fewer employee errors incase of job enrichment.
y Another study also found that employees were morecreative when they worked in an enriching context of
complex, challenging jobs, and supportive, non-controlling supervisory climate.
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Schemes of payment by resultsy ILO classifies all the schemes of payment by results
into 4 categories:
y Schemes where the workers earnings vary in the sameproportion as output.
y Schemes where earnings vary less proportionately thanoutput.
y Schemes where earnings vary proportionately morethan output.
y Schemes where earnings differ at different levels ofoutput.
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Earnings varyinthe sameproportion asoutput
Earnings varylessproportionatelythan output
Earnings varyproportionatelymore thanoutput
Earnings differat differentlevels of output
INCENTIVE SCHEMES
Straight piecework
Standardhour
HalseyPlan
Rowan Plan
BarthScheme
BedauxPlan
High piecerate
Highstandard hour
Taylorsdifferential piecerate
Merrickdifferential piece
rate
Gantt task system
Emersons
efficiencyplanTypes of Incentives
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y Straight Piece Work Simplest, oldest and the most commonly used method
Here, rate per unit of output is fixed, & total earnings of a worker = total output in units*rate per
unit
e.g. rate per unit is 10 paise and the total output is 100 units,his earnings will be 100*0.10=Rs. 10.00.
Standard Hour System(also called 100 % gains-sharing)y Here, standard time in terms of hours is fixed for completion
of a job. The rate per hour is then determined.
y A worker is paid for a standard time at his or her time-rate if
he or she completes the job in the standard time or less oreven more, unless he or she is guaranteed time wages.
y If time wages are guaranteed, he or she gets paid on the basisof the time taken multiplied by the time-rate.
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Examples:
Standard time=10 hrs
Rate per hour- Re 1Case (i)
Time taken= 8 hrs
Earnings= 10*1 =R
s. 10.00Case (ii)
Time taken = 12 hrs.
(a) Earnings if time wages are not guaranteed
= 10*1=Rs. 10.00(b) Earnings if time wages are guaranteed
=12*1=Rs. 12
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arnings varying proportionately less than output
y In all types, time is used as the measure of output andbonus is paid on the time saved, i.e. the difference
between the standard time-set for the job and the timeactually taken.
y Called gain sharing schemes as both employee &employer share gains resulting from the saved time.
y
Applied where it is not possible to set standards or tomeasure the workers output accurately.
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Halseysystem:
Given by E.A. Halsey (an American engineer)
Standard time is fixed for the completion of a job & therate per hour is then determined.
Time wages are guaranteed even if the output of theworker is below standard.
Bonus paid to a worker is equal to 50% of time savedmultiplied by rate per hour.
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y Example:Standard time= 10 hrsRate per hour= Re 1
Case (i)Time taken=10 hrsEarnings = 10*1 = Rs. 10.00Case(ii)
Time taken=12 hrsEarnings = 12*1 = Rs. 12.00Case(iii)Time taken=8 hrs
Earnings : (time taken * hourly rate) + bonusTime wages= 8*1 = Rs. 8.00Bonus= *2*1=Rs. 1.00
=Rs. 9.00
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y Rowan Plan:y Introduced by D. Rowan in 1901.y Standard time and rate hour are fixed.y
Bonus paid to the employee is equal to the proportion of the time saved to thestandard time.
y Example:Standard time= 10 hrsRate per hour= Re 1
Case (i)
Time taken=10 hrsEarnings = 10*1 = Rs. 10.00Case(ii)Time taken=12 hrsEarnings = 12*1 = Rs. 12.00Case(iii)Time taken=8 hrsEarnings : Time taken* hourly rate+ bonusTime wages= 8*1 = Rs. 8.00Bonus= 2/10*8=Rs. 1.60
=Rs. 9.60
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y Barth Variable Sharing System:
y Does not guarantee the time rate unlike Halsey and
Rowan systems.y Workers pay is ascertained by multiplying the
standard hour by the number of hours actually takento do the job, taking the square root of the product and
multiplying it by the workers hourly rate.y Example:
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Standard time= 10 hrsRate per hour= Re 1
Case (i)
Time taken=12 hrsEarnings = (12*10) = Rs. 10.95*1Case(ii)Time taken=10 hrsEarnings = (10*10) = Rs. 10*1=Rs.10.00
Case(iii)Time taken=8 hrsEarnings := (8*10)
= Rs. 8.94*1=Rs. 8.94
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yBedeaux scheme:y Standard time for a job is fixed.
y Each minute of the standard time is called a point orB.
y Each job has a standard number of Bs.
y The worker receives bonus which is equal to 75% of theno. of points earned, in excess of 60 per hour, multipliedby one sixtieth of the workers hourly rate.
y If a worker does not reach his or her standard, he or sheis paid at the time rate.
y Example:
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y Standard time = 10 hrs
y Rate per hour = Re 1
Case (i)Actual time = 12 hrs
Earnings = 12*1=Rs. 12.00
Case(ii)
Actual time = 8 hrs
Earnings: Time wages = 8*1=Rs. 8.00Bonus:Standard Bs=10*60=600Actual Bs = 8*60=480
Bs saved = 120Bonus 75100(1201)/60= Rs. 1.50
Total earnings = 8+1.50=Rs.9.50
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Questiony Why college and university professors and
administrative staff are not brought under incentive
schemes? Make a case of their inclusion.