Types of Incentive Schemes

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Archana Choudhary

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 maximize human efficiency in job performance. The scientific management approach resulted in job engineering, which focused on product and process, plant layout, human-machine interactions, etc.

Advances in technology, computer systems, etc., have

resulted in job specialisation. Even though specialization resulted in better control and efficiency, other aspects like motivation and satisfaction were neglected. Consequently, over a period of time, efficiency decreased and dissatisfaction prevailed among the work force. The problems today are compounded with downsizing and increased use of technology. For academicians as well as practitioners, job design takes on special importance as it reduces stress, enhances motivation, and results in satisfaction.

Job enlargement
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. For example, it an assembly-line worker was inserting 100 nuts in a day, he would perhaps increase it by another 50. The variety that is experienced by the individual is only in terms of the number of tasks. Some amount of boredom may be relieved by this approach.

Disadvantages of job enlargement


First, the workers need to be trained or multi skilled in

order to handle the variety of jobs. Maybe it requires a new way of functioning in an already existing system. Moreover, it may not be possible to introduce jobenlargement programmes for all the jobs in the organization.

Job enrichment :
The proposition of Herberg that motivators when present

enhance the motivational aspects of the individual finds its direct application in a job-enrichment programme. In enrichment, the job is enlarged vertically so that there is greater variety of work content. It requires a high level of knowledge and skill, gives workers more autonomy and responsibility in terms of planning directing and controlling their own performance, and provides opportunities for personal growth and a meaningful work experience.

Advantages of job enrichment


Research has supported us with evidence that there is

more employee satisfaction, better customer service, less employee overload, and fewer employee errors in case of job enrichment. Another study also found that employees were more creative when they worked in an enriching context of complex, challenging jobs, and supportive, noncontrolling supervisory climate.

Schemes of payment by results


ILO classifies all the schemes of payment by results

into 4 categories: Schemes where the workers earnings vary in the same proportion as output. Schemes where earnings vary less proportionately than output. Schemes where earnings vary proportionately more than output. Schemes where earnings differ at different levels of output.

INCENTIVE SCHEMES
Earnings vary in the same proportion as output Straight piece work Standard hour Earnings vary less proportionately than output Halsey Plan Earnings vary proportionately more than output High piece rate High standard hour Earnings differ at different levels of output

Rowan Plan
Barth Scheme

Taylors differential piece rate Merrick differential piece rate Gantt task system Emersons efficiency plan

Bedaux Plan

Types of Incentives

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) Here, standard time in terms of hours is fixed for completion of a job. The rate per hour is then determined. 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 or even more, unless he or she is guaranteed time wages. If time wages are guaranteed, he or she gets paid on the basis of the time taken multiplied by the time-rate.

Examples: Standard time=10 hrs Rate per hour- Re 1 Case (i) Time taken= 8 hrs Earnings= 10*1 =Rs. 10.00 Case (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

Earnings varying proportionately less than output


In all types, time is used as the measure of output and

bonus is paid on the time saved, i.e. the difference between the standard time-set for the job and the time actually taken. Called gain sharing schemes as both employee & employer share gains resulting from the saved time. Applied where it is not possible to set standards or to measure the workers output accurately.

Hasley system: Given by E.A. Halsey (an American engineer) Standard time is fixed for the completion of a job & the rate per hour is then determined. Time wages are guaranteed even if the output of the worker is below standard. Bonus paid to a worker is equal to 50% of time saved multiplied by rate per hour.

Example:

Standard time= 10 hrs Rate per hour= Re 1 Case (i) Time taken=10 hrs Earnings = 10*1 = Rs. 10.00 Case(ii) Time taken=12 hrs Earnings = 12*1 = Rs. 12.00 Case(iii) Time taken=8 hrs Earnings : Time wages= 8*1 = Rs. 8.00 Bonus= *2*1=Rs. 1.00 =Rs. 9.00

Rowan Plan:
Introduced by D. Rowan in 1901. Standard time and rate hour are fixed. Bonus paid to the employee is equal to the proportion of the time saved to the standard time. Example:

Standard time= 10 hrs Rate per hour= Re 1 Case (i) Time taken=10 hrs Earnings = 10*1 = Rs. 10.00 Case(ii) Time taken=12 hrs Earnings = 12*1 = Rs. 12.00 Case(iii) Time taken=8 hrs Earnings : Time wages= 8*1 = Rs. 8.00 Bonus= 2/10*8=Rs. 1.60 =Rs. 9.60

Barth Variable Sharing System:


Does not guarantee the time rate unlike Halsey and

Rowan systems. Workers pay is ascertained by multiplying the standard hour by the number of hours actually taken to do the job, taking the square root of the product and multiplying it by the workers hourly rate. Example:

Standard time= 10 hrs Rate per hour= Re 1 Case (i) Time taken=12 hrs Earnings = (12*10) = Rs. 10.95*1 Case(ii) Time taken=10 hrs Earnings = (10*10) = Rs. 10*1=Rs.10.00 Case(iii) Time taken=8 hrs Earnings := (8*10) = Rs. 8.94*1=Rs. 8.94

Bedeaux scheme:
Standard time for a 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 no. of points earned, in excess of 60 per hour, multiplied by one sixtieth of the workers hourly rate. If a worker does not reach his or her standard, he or she is paid at the time rate. Example:

Standard time = 10 hrs 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. 8.00 Bonus: Standard Bs=10*60=600 Actual Bs = 8*60=480 Bs saved = 120 Bonus 75100(1201)/60= Rs. 1.50 Total earnings = 8+1.50=Rs.9.50

Question
Why college and university professors and

administrative staff are not brought under incentive schemes? Make a case of their inclusion.

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