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What is meant by Scanlon Plan?
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Named after Mr. Joseph Scanlon of United States, this plan is the most popular for shaving the gains from increase in productivity. It provides for payment of 10% participating bonus for every 10% increase in productivity. The benefit is extended to all employees except the members of top management.
Under the plan, workers are not paid the entire amount of bonus earned by them in any month. One half of the first 15% of such bonus is set apart for the creation of a reserve fund. This fund is used to neutralise the effects of any fluctuations in labour costs. In case a part of such fund remains unused, it too is distributed among the workers in the last month of the year and then a new fund is a created for the New Year.
