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Incentives payments
Incentives payments
By:
Sheeba Rehman
Wage incentives include all the plans that
Wage incentives include all the plans that
provide extra pay for extra performance In
provide extra pay for extra performance In
addition to regular wages for the job.
addition to regular wages for the job.


Incentives Programme
Incentives Programme


It implies monetary inducements offered to

It implies monetary inducements offered to
employees to perform beyond acceptance
employees to perform beyond acceptance
standards.
standards.
Different Types of Variable Pay
Different Types of Variable Pay
Plans
Plans
Cash Profit
Sharing
Stock
Ownership or
Options
Balanced
Scorecard
Productivity /
Gain- Sharing
Team / Group
Incentives
Lump-Sum Bonuses
Lump-Sum Bonuses


Merit Pay
Merit Pay


Short Term Pay-for-Performance

Short Term Pay-for-Performance
Plans
Plans


Individual Spot Awards

Individual Spot Awards


Individual Incentives
Individual Incentives
Long-Term Incentive Plans
Long-Term Incentive Plans
Employee Stock Ownership Plans
Employee Stock Ownership Plans
(ESOPs)
(ESOPs)
Performance Plans
Performance Plans(P erfo rmance
(Performance
Share and Performance Unit)
Share and Performance Unit)
Broad-Based Option Plans (BBOP)
Broad-Based Option Plans (BBOP)


Individual Incentives
Individual Incentives
Under a system of individual incentives, all
Under a system of individual incentives, all
or a portion of an individual’s pay is tied to
or a portion of an individual’s pay is tied to
their performance.
their performance.



Improve Organizational Performance

Improve Organizational Performance
Group Incentives
Group Incentives
Organizational Measures
Organizational Measures


Measured Periodically
Measured Periodically



Gain-Sharing Plans
Gain-Sharing Plans
Team / Group Incentive Plans
Team / Group Incentive Plans
Profit Sharing Plans
Profit Sharing Plans


Earnings-at-Risk Plans
Earnings-at-Risk Plans
Individual
Individual Incentive Plans
Incentive Plans
Method of Rate Determination
Units of
production per
time period
Time period per
unit of production
(1
)
(2
)
(4
)
(3
)
Straight
piecework plan
Standard hour
plan
Bedeaux plan
Halsey 50 - 50
method
Rowan plan
Gantt plan
Taylor
differential
piece rate
system
Merrick multiple
piece rate
system
Pay constant
function of
production level
Pay varies as
function of
production level
Relationshi
p between
production
level and
pay
Types of Incentives Plans
Types of Incentives Plans
The ILO classifies all the schemes of payment by results
into
four categories:
Earning vary in
the same proportion
as output
Straight Piece Work
Standard Hour

Earnings vary
less
proportionately
than output
Halsey Plan
Rowan Plan
Barth Scheme
Bedaux Plan
Earnings vary
Proportionately
More than outputs
High Piece Rate
High Standard Hour
Earnings differ
at different levels
of output
Taylor’s Differential
Piece Rate
Merrick Differential
Piece Rate
Gantt Task System
Emerson’s Efficiency
plan
Halsey Plan
Rowan Plan
Barth Plan
Bedaux Plan
Time - Based
Output - Based
Taylor’s Differential Piece Rate
Merrick Differential Piece Rate
Gantt Task System
Emerson’s Efficiency plan
 Halsey Plan
Std Time= 10 Hrs
Rate per hr= Re 1
Case 1 time taken= 10 Hrs
Earnings = 10* 1
Case 2 Time taken = 10 Hrs
earnings = 12* 1
Case 3 Time taken = 8 Hrs
earnings = 8*1
Bonus = ½*2*1 = Rs 1.00
Rs 9.00
Rowan Plan
Std Time= 10 Hrs
Rate per Hr= Re 1
Case 1 time taken= 10 Hrs
Earnings = 10* 1
Case 2 Time taken = 10 Hrs
earnings = 12* 1
Case 3 Time taken = 8 Hrs
earnings = 8*1
Bonus = 2/10*8 = Rs 1.60
Rs 9.60
Barth Plan
Std Time= 10 Hrs
Rate per Hr= Re 1
Case 1 time taken= 10 Hrs
Earnings = 10 * 10
= 10*1= Rs 10.00
Case 2 Time taken = 12 Hrs
earnings = 12* 10
= 10.95*1 = 10.95
Case 3 Time taken = 8 Hrs
earnings = 8*10
= 8.94 * 1 = 8.94
Bedaux Plan
Std Time= 10 Hrs
Rate per Hr= Re 1
Case 1 time taken= 12 Hrs
Earnings = 12 * 1
= 12.00
Case 2 Time taken = 8 Hrs
earnings = 8*1
= 8.00
Bonus:
Bonus:
Std Bs
= 10*60 = 600
Actual Bs
= 8*60 = 480
Bs saved
= 120
Bonus
75 * 120*1 = Rs 1.50
100 60
Total earnings = 8+1.50
=
Taylor’s Differential Piece-Rate
Standard outputs: 100 Units
Rate per Unit:
10 paise
Differential to be applied:
120% of piece-rate at or above the standards
80% of piece-rate when below the standards
Case 1: Outputs = 120 units
Earnings = 120* 120 * 0.10 = Rs 14.40
100
Case 2: Outputs = 90 units
Earnings = 90* 80* 0.10 = Rs 7.20
100
Merrick Differential piece-rate
Straight piece-rates less than 83% of the Std outputs
110% of the base-piece rate for 83%-100% of the Std outputs
120% of the base-piece rate for more than 100% of the Std outputs
Case 1 Output = 80 units
Efficiency = 80 *100 = 80%
100
Earnings: As the efficiency is less than 83%, only the base pie-rate applies:
80*0.10 = 8.00
Case 2 Output
= 90 units
Efficiency
= 90 *100 = 90%of
100
Earnings: As the efficiency is 83% but less than 100%, 110% the base pie-rate
applies:
90*110*0.10 = 9.90
100
Case 3 Output
= 110 units
Efficiency
= 110 *100 = 110%
100
Earnings: As the efficiency exceeds 100%, 120% of the base piece-rate applies:
110*120*0.10 = 13.20
Gantt Task System
Rate per Hr
=Re 0.50
High piece-rate
= Re 0.10
Std Outputs
= 80 units
Time taken
= 8 Hrs
Std Bonus
= 20%
Case 1 Output
= 70 units
Earnings
As the output is less than the standard only time wages are paid to the worker
=8*0.50=Rs 4.00
Case 2 Output
=80 units
Earnings
As the output is equal to the standard, the worker is entitled to time wage plus
20% bonus
Time wages
=8*0.50= Rs 4.00
Bonus
=20*4
= Re 0.80
100
Total earnings
= Rs 4.80
Case 3 Output
=110 units
As the output is more than th Std, the worker is entitled to a high piece rate
10*0.10= Rs 11.00
Emerson’s Plan
Up to 67% of efficiency, the workr is determined by dividing the time taken by the Std

Time-rate

Up to 100% efficiency, 20% bonus is paid to workers

An additional bonus of Rs 1% is added for each additional 1% eficiency

Case 1 Output in 10 Hrs: 50 units

Efficiency: 50%( below 67%, the worker is eligible for 50% of the time wae as bonus)

Case 2 Output in 10 Hrs : 100 units

Efficiency : 100% (time-wage + 20% bonus)

Case 3 : Output in 10 Hrs : 130 units

Efficiency : 130%
At the rate of 20% at 100% efficiency and 1% increase for every 1% increase in
Efficiency, the worker is eligible for 50% of the time wage as bonus:
Time wag =10*1
Rs 10.00
Bonus
=50*10.00 Rs 5.00
100
Rs 15.00



Plan is clearly communicated

Plan is clearly communicated


Plan is understood
Plan is understood


Rewards are easy to calculate

Rewards are easy to calculate
Conditions for Effective Incentives Plans
Conditions for Effective Incentives Plans
Employees participate in administering the plan
Employees participate in administering the plan


Employees believe they are being treated fairly

Employees believe they are being treated fairly


Employees believe they can trust the company

Employees believe they can trust the company
and that they have security
and that they have security


Rewards are awarded as soon as possible after the

Rewards are awarded as soon as possible after the
desired performance.
desired performance.
PPT of Incentives Plans
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2918527-PPT-of-Incentives-Plans