Topic: Incentive Wages Plan

What is incentive wages plan

Wage system that rewards a worker for productivity above an established standard.

Incentive pay is based on a bonus given to the workers who exceed a given standard production rate within a defined period of time for increasing the efficiency of employees and workers

Things Included In Incentive Wage Plans

free house facilityfree education of children of workersfree medical treatmentBonuscommissionand other excess money gifts.

OBJECTIVES OF WAGES INCENTIVE PLAN

Good employee-employer relationship. Helps in increasing productivity. Boosts morale of employee. Motivates employee to perform better.improves quality of life. Improves the image of the organization.

Features of incentive plans:

1) Minimum wages are guaranteed to all workers2) Incentives by way of bonus, etc are offered to efficient workers for the time saved.3) A standard time is fixed and the worker is expected to perform the given work within the standard time.

Types Of Incentives

Straight piecework planThe 100 percent bonus planGroup bonus plan

Advantages of incentive plan

(i) Increase in volume of output .

(ii) Reduction of cost of production per unit

(iii) Reduction of labor turnover.

(iv) Reduction of idle time

(v) Benefit to consumers

Disadvantages of Incentive Plans :

i. Difficulty to fix standard time.

ii. More supervision required.

iii. Union opposition.

iv. Rough work.

v. Effect health.

Motives of incentive wage plan

To earn higher wageTo reduce unit costTo give rewardsControl over laborGreater output

Practical study of

Introduction

Summit Bank Ltd is one of the fastest growing commercial banks of Pakistan, which, in a very short span of time, has expanded its network across the country On 18th August 2010, Arif Habib Bank Ltd was rebranded as Summit Bank Ltd.

Incentives given by Summit Bank are:

1. Medical incentive

In summit bank the medical incentive is given to all the employees of the bank and to their family members. The complete medical facility is given to the employees and their family members for the whole year.

2. Commission

The commission is given to all the low level employees like guards, sweepers of the bank. The criteria for the commission is that employees should have their 60% of salary in current account and remaining 40% in saving account per month in the summit bank.

3. Gifts

The gifts are mostly given to the Marketing employees of the bank on their achievement of the tasks or goals assigned to them with in the given period of time and to maintain that given tasks. The gifts are LCDS. BIKES, CARS ETC.The gifts are given throughout the year After completing of tasks.

4. Entertainment allowance

The other incentive given by the summit bank is the Entertainment allowance. This allowance consists of TEA and other refreshments. The Entertainment allowance is given on daily basis from the guards to the manager of the bank.

5. Gratuity fund

The gratuity fund is created for all the employees. The fix percentage from salary is deducted and added in the fund. The bank also contributed the same amount of percentage in that fund.The amount from gratuity fund is given to the employees after their retirement from the bank.

6. Refreshment packages

The refreshment packages are given to the employees of the bank at 4 times in a year. The refreshment packages are given quarterly at every year. The employee can take it whenever they want in one quarter.The fix amount is given to the employees according to their posts.

SWOT Analysis

Strengths:

good incentives plan for low level employees.Clear incentives plans for all the employees.

Weakness:

No big incentives for high level employees.No proper implementation on incentives plan.

Opportunity

They have the opportunity to start the pension scheme for the employees.They can also give the house incentives to the employees.

ThreatsThe incentives plans of competitor banks are the main threats which are attracting the employees of the bank.The pension scheme of National Bank of Pakistan is also the threat for the summit bank.

Conclusion

Wage system that rewards a worker for productivity above an established standard.Incentives by way of bonus, etc are offered to efficient workers for the time saved.The incentives given by summit bank are Bonus,comission,refreshment package and gifts to their employees.

Suggestions

They should start the pension scheme for the employees.Plan more incentives to high level employees.They should also give the house incentives to the employees.