10/14/22, 7:05 PM Taylor's Differential Piece Rate System (Formula and Calculation)

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Taylor’s Differential Piece Rate

System (Formula and
Calculation)
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Taylor’s Differential Piece Rate System (Formula and

Calculation)!

Differential Piece Rate System was introduced by Taylor, the father of

scientific management. The underlying principle of this system is to
penalise 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. Taylor was of the view that an
inefficient worker should have no place in the organisation and he
should be compelled to leave the organisation by paying him a low
piece rate for low production.

Taylor proceeded on the assumption that through time and motion

study it is possible to fix a standard time for doing a particular task.
To encourage the workers to complete the work within the standard
time, Taylor advocated two piece rates, so that if a worker performs
the work within or less than the standard time, he is pad a higher
piece rate, and if he does not complete the work within the standard
time, he is given a lower piece rate.

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Thus, if the standard production has been fixed at 8 units per day of 8
hours (taking normal piece rate as Re 1), the higher piece rate for 8 Privacy - Terms

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10/14/22, 7:05 PM Taylor's Differential Piece Rate System (Formula and Calculation)

units or beyond may be Rs 1.20 per unit and the lower rate for an
output of less than 8 units per day, may be 80 P. per unit.

Hence, Taylor decided to give a large reward to those who would

complete the work within or less than the standard time and much
less wages to those who would not complete the job within the
standard time. The system is very harsh to the inefficient workers
because they earn much less wages on account of lower output and
lower rate.

Moreover, minimum wages are not guaranteed under this method.

Another drawback of the system is that if a worker just fails to
complete the work within the standard time earns much less wages
than a worker who just completes the job within the standard time.
Therefore, the system is now almost out of use.

Illustration :

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Calculate the earnings of workers A and B under Straight

Piece-rate System and Taylor’s Differential Piece-rate
System from the following particulars:

Normal rate per hour = Rs 1.80

Standard time per unit = 20 seconds

Differentials to be applied:

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80% of piece rate below standard

120% of piece rate at or above standard.

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10/14/22, 7:05 PM Taylor's Differential Piece Rate System (Formula and Calculation)

Worker A produces 1,300 units per day and worker B produces 1,500
units per day.

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Related Articles:
1. Difference between Time Rate and Piece Rate System of Wage
Payment
2. How to Calculate Earnings under Taylor’s Differential Piece Rate
System?

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