Explain Personnel Incentive Wage Plans

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What is meant by Personnel Incentive Wage Plans?

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Personnel Incentive Wage Plans—These plans motivate the individuals to produce more. Such plans may be based on lime or production. Following are some of the individual wage incentive plans.
1. The Halsey Premium Plan—A mechanical engineer F.A. Halsey devised this plan. It is a simple combination of the time-speed basis of payment. The worker gets his wages for the time he works. For the calculation of premium, a standard time is fixed for each job on the basis of past performances. If the worker finishes the job before this standard fixed time, he gets bonus for the time saved by him.
The rate of bonus is 30% to 50% of the wage payable for the time saved. Suppose a worker gets his wages @ 60 paise per hour. He finishes his work in 15 hours for standard time fixed is 20 hours. Thus he saves 5 hours. He will get a total wage of Rs. 10.50. This is worked out as below :
Wage for 15 hours @ 60 paise = Rs. 9.00
Wages for 5 hours (the time saved) @ 50% of the usual hourly rate = Rs. 1.50

2. The Rowan Premium Plan—It is widely used in England. It was introduced by James Rowan of David Rowan & Sons, Glassgow in 1901. It is modification in the Halsey's Plan. The premium is calculated on a percentage of wages for the time worked and not for the time saved. This gives more bonus to the workers. It is calculated by the following formula:
Time taken
Bonus = Time Saved X standard time Hourly Rate
Thus, if the worker finishes the job in 15 hours for standard time of 20 hours and the hourly rate of wage is 60 paise, a worker will get a total of Rs. 11.25.

3.Taylor's differential Piece Rate System—As a part of scientific management, this plan was devised by Taylor with a view to provide greater incentives to efficient workers. Under this plan, a standard task is established by the techniques of time and motion study and two piece rates are set up for each job. A high piece rate is allowed to those who can make equal to higher than the standard performance; and for others who cannot reach the standard, a lower piece rate exists. Thus, this method penalises the slow and lazy worker and pays incentive to efficient workers.

4.The Gantt Task and Bonus Plan—H.L. Gantt, an associate of Taylor, devised this scheme on the basis of Taylor's plan. Under this scheme, fixed time rates are guaranteed. Output standards and time
Standards are established for the performance of each job. Workers completing the standard job within the standard time or a shorter time receive wages for the standard time plus a bonus! The bonus is a percentage, varying from 20 to 50, of the wage for the standard time. When a worker fails to turn out the required quantity of products, he simply gets his time rate without any bonus.
9+1.5= Rs. 10.50
He will get Rs. 10.50 and will also earn something more by utilising the time saved i.e., 5 hours.

5. Emerson's Efficiency Bonus Plan—This plan has been named after Harrington Emerson; the innovator of this plan. Under this plan every worker is guaranteed his day wages irrespective of his performance.
A standard output is fixed, and is represents 100% efficiency. According to the plan upto 66 2/3 the guaranteed time wages are paid to the workers, after this they are paid bonus at stated ratio of the time wages.
Emerson used 32 empirical bonus percentages for efficiency beyond 66 2/,3% under this plan, the bonus starts from 0.01% above 66 2/3% efficiency and increases to 20% at maximum efficiency. After this point the bonus is 20% above the basic wages plus 1% for each 1% increase in efficiency.

6. The Bedaux Points Premium Plan—Under this plan, Standard time is divided into Standard minutes. Each minute of standard time is called Bedaux point or B's. B's are indicated on each job ticket. Time wages are paid until 100% efficiency is reached. Bonus is paid on the basis of number of Beduax Points saved. Bonus at 75% of wages of Bedaux saved is paid to the worker and 25% is paid to the foreman.

7. Merrick's Multiple Piece Rate Plan—It is an improvement over Taylor's Differential Plan. According to this plan, three piece rates for a job is fixed. None of these three piece rates are fixed below the normal level. These three rates are applied in the manner given below:
Rates Bonus Incentive
1. Upto 83 '/3% Normal Rate
2. Above 83 1/3 % to 100% 110% of Normal Rate
3. Above 110% 120% of Normal Rate