Thursday, December 19, 2013

Wage Incentives - Literature Review

Taylor's differential piece rate system:: This system introduced to penalize a slow worker by paying him a low piece rate for low production and to reward an efficient worker by giving him a higher piece rate for a higher production. Thus if a worker completes the work within or less than the standard time, he is paid a higher piece rate and if he does not complete the work within the standard time, he is given a lower piece rate.

Merricks multiple piece rate: Under this method, three piece rates are applied for workers with different levels of performance. Wages are paid at ordinary piece rate to those workers whose performance is less than 83% of the standard out put. 110% piece rate is given to workers whose performance is between 83% and 100% of standard. 120% of ordinary piece rate is given to those workers who produce more than 100% of the standard output.

Gants's task and bonus plan: This plan is based on careful time and motion study. A standard time is fixed for doing a particular job, worker's actual performance is compared with the standard time and his efficiency is determined. If a worker takes more time then the standard time to complete the job (Below 100%) he is given wages for the time taken by him and if a worker takes the standard time to perform job (100% efficiency), he is given wages for the standard time and bonus of 20% of wages earned. If the worker take less time than the standard time his efficiency is more than 100% and he is given wages for the actual time and bonus at the rate of 20%.

Halsey premium plan: Under this method standard time is fixed for the job and worker is given wages for the actual time taken to complete the job at the agreed rate per hour plus a bonus to one half on the wages of the time saved.
Total wages = T x R + % (S - T) R
Where, T = actual time, R = Rate per hour, S = Standard time, % = 50% otherwise mentioned in the question.

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