Mercer Global Talent Trends 2024 - Human Resources
An insight into wage incentives
1. An insight into Wage Incentives
|Meaning |Pros & Cons | Kinds|
Analysis| Fringe Benefits|
2. Incentive Compensation or Wage
Incentives
• Extra financial motivations designed to
stimulate human effort by rewarding the
person.
• Given to improve performance thereby
achieving desired results.
• Designed to attract and retain talent and for
better utilization of human resource
3. Valid Incentive Plan - Essentials
• Mutual trust & understanding while
developing an incentive plan.
• Sound Industrial relations
• Worker’s participation
• Scientific standards for payment of wages
• Guaranteed minimum wage
• Simplicity
• Equitable
4. Valid Incentive Plan - Essentials
• Economical
• Flexibility
• Prompt Payment
• Adequate Incentive
• Ceiling on earnings
• Based on reasonable standards
• Grievance Machinery
• Proper Appraisal system
• Follow-up
5. Wage Incentive Plans
Individual Incentives
Time Based
1. Halsey Plan
2. Rowan Plan
3. Emerson Plan
4. Bedeaux Plan
Output Based
1. Taylor Plan
2. Merrick Plan
3. Gantt Plan
Group Incentives
1. Priestman Plan
2. Scanlon Plan
6. Wage Incentive Plan
Individual Incentive
• Earnings directly
related to the
individual’s
performance.
• Time based or output
based.
• Based on standard time
and calculations
therein.
Group Incentive
• All other incentive plans
given apart from
individual incentive
plans.
• Creates teamwork and
motivates new
members
• Defeats rivalry among
members
7. Indi v idua l
Inc ent i ve Plans Halsey or Weir Plan
• Developed by F.A.
Halsey in Weir
engineering works
• A worker who
completes his job in
less than standard
time is paid more
• A bonus (usually 50
% ) of the time saved
is paid
• The bonus is
calculated based on
the time rate system
Merits
• Simple & easy to understand
• Employer & worker get equal benefit
• Guaranteed minimum wage for all
Demerits
• Not scientific and fair
• Quality of work might be absent due to
workers rush to completion
• Much clerical work involved
• Wastage and spoilage may increase
퐵표푛푢푠 %
Total Wages = time taken * Rate of wage +
100
∗
(standard time − time taken)∗rate
8. Rowan Plan
• It was developed by James
Rowan of England
• A minimum wage
guaranteed to every worker
• A standard time is
determined in advance
• Total wages =
• T*R + (T*R*
푇푖푚푒 푠푎푣푒푑
푠푡푎푛푑푎푟푑 푡푖푚푒
)
Emerson Plan
• It was developed by
Harrington Emerson
• Standard time for the job is
determined scientifically
• Bonus is given at an
increasing percentage
beyond the prescribed level
of efficient
• Total wages=
• (T*R)+(% of bonus*T*R)
9. Bedeaux point plan
• This plan was developed by
Charles E. Bedeaux
• Standard time divided into
standard minutes
• Workers who completed the
less than standard time are
paid bonus
• Bonus is 75% of the wages
for worker and 25% for
foreman
Taylor’s differential piece rate
system
• Its about time and motion
study where two piece rates
are laid down
• Lower rate for workers who
fail to complete the task
with in the time
• higher rate for those who
completes with in the time
10. Merrick’s multiple piece rate
• This plan was developed to
overcome a drawback which
relates to an abrupt change
in piece rate
• Workers producing less than
83% of standard output are
paid B.P.R
• Those producing from 83%
to 100% are paid 110% B.P.R
those producing more than
standard output are paid
120% of the B.P.R.
Gantt’s Task and Bonus plan
• This plan was developed by
Henry L. Gantt
• Minimum wage is guranteed
to all workers
• A worker who fails to
complete the task with in
given time paid for actual
time spent
• Workers who achieve or
exceed the standard gets
extra bonus varying between
20% to 50%
11. GROUP INCENTIVES PLANS
In some cases, E.g.., assembly line industries it is not possible
to determine individual performance
Group based or team-based incentives plans reward all team
members equally based on overall performance of the team
member.
Under group based incentive plan, individual out put can’t be
measured.
So team performance is evaluated on the basis of time taken
rather than output produced, if team complete their target in
well advanced to standard time the team member are eligible
for incentives.
12. CONTINUED…..
Payment to team members may be made in the form of cash
bonus or in the form of non-cash reward such as pleasure
trip, times off or luxury items.
Methods for team based incentives plans are
– Preistman’s production plan
– Towne’s plan
– Scanlon plan
13. Wage Incentive - PROS
Improvements
in work flow
Man machine
relationship
Motivation to
earn more
Productivity
Improves
Discipline
Minimising
Absenteeism
Reduces cost of
supervision
Aggravates Team
Work
Creates Co-operation
14. Wage Incentives - CONS
Workers may
overwork and
might spoil their
health
Risk of absence
in quality due to
time factor
Resistance from
employees
Changes in
technical factors
Disregard of
safety
regulations
Faulty
management as
a reason behind
incentive plans
Jealousy and
conflict
Increase in cost
More clerical
work
15. Fringe Benefits
fringe benefits refers to the extra benefits
provided to employees in addition to
the normal compensation paid in the
form of wage or salary.
16. Main features
supplementary forms
paid to all employees
indirect compensation
help raise the living conditions
may be statutory or voluntary
17. Objectives of Fringe Benefits
• To create & improve sound IR.
• To motivate the employees.
• To provide security to the employees.
• To protect the health of the employees.
• To promote employee’s welfare.
• To create a sense of belongingness.
• To meet the requirements of various
legislations relating to FB.
18. Types of Fringe Benefits
Payment for time not worked.
Employee security.
Safety & health.
Workmen’s compensation.
Health benefits.
Voluntary arrangements.
Welfare & recreational facilities.
Old age & retirement benefits.