Describe the essentials of a good incentive plan of wage payment.

[rms]

What steps are needed for the successful implementation of wage incentive plans?

[nbm]

Following principle should be adhered to make the wage incentive plan successful:
(1) Suitable Climate—Success of an incentive plan greatly depends on the kind of relation between management and workers. If the relations are good, any incentive plan may work successfully. If there is mutual ill-will workers may oppose it considering it as an attempt by the management to force them to work hard. It is necessary that before introducing any incentive scheme, workers and management should discuss the scheme.
(2) Information as to goals—The workers should be told about the objectives and goals of the incentive plan in clear terms. The objective may be to increase the quality or quantity of the production.
(3) Simplicity—The incentive scheme should be easy to understand and simple to operate.
(4) Just and Equitable—It should take into account the skills and abilities of workers. If it is unduly biased in favour of efficient and experienced workers, it will lack motivation for those who arc not so. If it seeks to favour inexperienced and inefficient workers, outstanding and ambitious workers will not have any use for it.
(5) Flexible—An incentive scheme should be flexible enough lobe adapted to the needs of any change in the situation.
(6) Attractive—Incentive payments, should be large enough to attract the employees. If a worker already earning Rs. 500 a month is to get an extra benefit of Rs. 25, he may not consider it worthwhile to strain himself for such a petty gain.
(7) Economical—The cost of operating an incentive scheme should be compared with the benefits accruing from it. The gains and benefits should exceed the cost of its implementation.
(8) Minimum guaranteed wages—The employee should be assured of a minimum base wage as determined by job evaluation method, irrespective of his output. This gives the worker a feeling of security about his means. The base rate may be reduced due to circumstances beyond his control.
(9) Grievance procedure—An incentive wage plan gives rise to grievances of all sorts. Therefore, the management should have an effective grievance procedure to deal with complaint and dissatisfaction ventilated by employees.
(10) Stability-The standards and rates once fixed under an incentive plan should not be frequently changed unless there is a substantial change in methods, materials or equipment used in production process. Frequent change in standards and rates will demoralise workers.
(11) Comprehensive coverage—Any scheme of incentive wages should embarrass all jobs. If any job in the unit is left out, the workers so neglected will develop grievances and will shake the faith in management.
(12) Conducive to workers health and welfare—The incentive wage plan should not aim at overstraining workers because it may tempt the workers to work hard in order to earn more and management may also be benefitted but such gains will not last longer. In the long run, its consequences will be disastrous because it will have ill effects on workers health.
(13) Attainable standards—Standards set for performance should reasonably attainable by average employees. They should be neither too difficult nor too easy to attainable by average employees. They should be neither too difficult nor too easy to attain.