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SECTION B
BY-
25.NANDINI R
26.NANDINI RAJA
27.NANDITHA
28.NAVEEN MADIVAL
29.NAYANA
Incentive payments .
Meaning of incentive plans:
incentive plans are the monetary
benefits paid to workmen in
recognition of their outstanding
performance.
Features of incentive
plans.
A feeling of secured income fails to evoke
positive response. Positive response will
surely come when incentives are included
as a part of the total remuneration.
Earnings of employees would be enhanced
due to incentives. There are instances
where incentive earnings exceed two to
three times rated wages or salaries.
Increased earnings would enable the
employees to improve their standard of
living.
Advantages of incentive
plans
Reduced absenteeism.
Better utilization of equipment.
Reduced scrap.
Reduced lost time.
Incentive packages are a very attractive
proposition for managements because they
do not affect employer’s contribution to the
provident fund and other employee
retirement benefits.
Types of incentive plans.
Incentive schemes where the workers’ earnings
vary in the same proportion as output.
Schemes where earnings vary proportionately
less than output.
Schemes where earnings vary proportionately
more than output.
Schemes where earnings differ at different
levels of output.
1.Incomes varying in proportion to
output.
The chief characteristic of this scheme where
incomes vary in proportion to output is that
any losses or gains resulting directly from a
worker’s output accrue to him or her ( leaving
to the employer any gains or losses in
overhead costs per unit of output).
Earnings varying proportionately
less than output.
These schemes are called as ‘gain sharing
schemes” as both employer and employee
share the gains resulting from the time saved.
The worker may be paid for half ( or any other
fraction ) of the saved, the employer getting
the balance.
Earnings varying proportionately
more than output.
This category includes two methods, the high
piece rate and the high standard hour
system. Under the former, the earnings of the
worker in proportion to his or her output, as in
straight is greater.
The higher rates start applying after the
standards have been reached. Similarly the
same logic applies to the high standard hour
system.
Earnings differing at different levels
of output.
These systems can best be explained by
describing how earnings vary from minimum
to maximum at different levels of output.
Earnings for part of the range may vary
proportionately less than output and for
another part proportionately more or more
usually in the same proportion as output.
Group incentive plans.
The most common system where in group
incentive plans are applied is piece work
system. The total earnings of a group are
first determined in accordance with the
incentive method which is followed, and
the earnings are then distributed among
the members of the group on some
equitable basis.
If the group consists of members with equal
skills, the earnings are divided equally
among them.
Continued…
When the members are of unequal skills, the
earnings of the group may be divided among
the members in proportion to their individual
time-rates, or according to specified
percentages, or in some cases only among a
certain number of members of the group.
Advantages of group incentive
plans.
Better co-operation among workers.
Less supervision.
Reduced incidence of absenteeism.
Reduced clerical work.
Shorter training time.
Disadvantages of group
incentive plans.
An efficient worker may be penalized for the
inefficiency of the other members in the
group.
The incentive may not be strong enough to
serve its purpose.
Rivalry among the members of the group
defeats the very purpose of team work and
co-operation.
Productivity
Production and productivity are often used
interchangeably.
Production refers to the total output and
productivity refers to the output relative to
inputs.
Productivity refers to the amount of goods and
services produced with the resources used.
Quantity of goods and
services
produced
Productivity =
Amount of resources used
Two variables are the amount of production
and amount of resources used.
Productivity can be
increased by
Increasing production using the same or
smaller amount of resources.
Reducing the amount of resources while
keeping the same production or increasing it.
Allowing the amount of resources used to
increase as long as production increases
more.
Allowing production to decrease ass long as
the amount of resources used decreases
more.
Increased productivity contributes to the
competitive advantage of an organisation.
INPUTS
OUTPUTS
Low productivity
organisations
Men less productive
Goods
Money
and
Machines organisations
Services
INPUTS
OUTPUTS
MEASURING
PRODUCTIVITY
Input resources of the production process
comprises of capital, labour, materials and
energy.
Types of productivity measurements are
1. Partial productivity
2. Multi factor approach
PARTIAL PRODUCTIVITY
The resources of productivity when measured
separately are called partial productivity.
output in a given
period
Partial productivity=
labour hours used in
period
Partial productivity is calculated for the
purposes of analysis and remedial actions.
Among all the inputs, direct labour is mainly
used as the denominator for calculating
partial productivity as they occupy a pride
place in the manufacturing systems.
MULTI FACTOR
The method of calculating productivity
considering all the resources is called multi
factor approach.
output in a given period
Total productivity =
labour+
capital+materials+
energy used in same
period
Labour
Productivity
Labour Productivity
There are at least 3 ways of measuring
labour productivity:
i.) Output per man- hour
Labour Productivity
= Added value for the product *
Total wages.
It is possible to estimate:
1)The average number of labour-hours required to
produce “n” units in a production run.
2)The total number of labour-hours required to
produce “n” units in a production run.
3)The extra number of labour-hours required to
produce the “nth ” unit of production run.
4)
There are three approaches
of learning curve analysis:
1. Arithmetic Analysis.
2. Logarithmic Analysis.