2918527 PPT of Incentives Plans
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Transcript of 2918527 PPT of Incentives Plans
Incentives paymentsIncentives payments
By:
Sheeba Rehman
Incentives ProgrammeIncentives Programme 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.
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 PlansPlans
Cash Profit Sharing Stock Ownership or Options
Balanced Scorecard
Productivity / Gain- Sharing
Team / Group Incentives
Short Term Pay-for-Performance Short Term Pay-for-Performance PlansPlans
Merit Pay Merit Pay Lump-Sum BonusesLump-Sum Bonuses Individual Spot AwardsIndividual Spot Awards Individual IncentivesIndividual Incentives
Long-Term Incentive PlansLong-Term Incentive Plans
Employee Stock Ownership Plans Employee Stock Ownership Plans (ESOPs)(ESOPs)
Performance Plans Performance Plans (Performance (Performance Share and Performance Unit)Share and Performance Unit)
Broad-Based Option Plans (BBOP)Broad-Based Option Plans (BBOP)
Individual IncentivesIndividual 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.
Group IncentivesGroup Incentives
Improve Organizational PerformanceImprove Organizational Performance Organizational MeasuresOrganizational Measures Measured PeriodicallyMeasured Periodically
Team / Group Incentive PlansTeam / Group Incentive Plans
Gain-Sharing PlansGain-Sharing Plans Profit Sharing PlansProfit Sharing Plans Earnings-at-Risk PlansEarnings-at-Risk Plans
IndividualIndividual Incentive PlansIncentive PlansMethod 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
Relationship between production level and pay
Types of Incentives PlansTypes of Incentives PlansThe ILO classifies all the schemes of payment by results into four categories:
Earning vary inthe same proportionas output
Straight Piece WorkStandard Hour
Earnings vary less proportionatelythan output
Halsey PlanRowan PlanBarth SchemeBedaux Plan
Earnings vary ProportionatelyMore than outputs
High Piece RateHigh Standard Hour
Earnings differat different levelsof output
Taylor’s Differential Piece RateMerrick Differential Piece RateGantt Task SystemEmerson’s Efficiency plan
Halsey Plan Rowan PlanBarth PlanBedaux Plan
Time - Based
Output - BasedTaylor’s Differential Piece RateMerrick Differential Piece RateGantt Task SystemEmerson’s Efficiency plan
Halsey PlanStd Time= 10 HrsRate per hr= Re 1
Case 1 time taken= 10 Hrs Earnings = 10* 1Case 2 Time taken = 10 Hrs earnings = 12* 1Case 3 Time taken = 8 Hrs earnings = 8*1 Bonus = ½*2*1 = Rs 1.00 Rs 9.00
Rowan PlanStd Time= 10 HrsRate per Hr= Re 1Case 1 time taken= 10 Hrs Earnings = 10* 1Case 2 Time taken = 10 Hrs earnings = 12* 1Case 3 Time taken = 8 Hrs earnings = 8*1Bonus = 2/10*8 = Rs 1.60 Rs 9.60
Barth PlanStd Time= 10 HrsRate per Hr= Re 1Case 1 time taken= 10 Hrs Earnings = 10 * 10
= 10*1= Rs 10.00Case 2 Time taken = 12 Hrs earnings = 12* 10
= 10.95*1 = 10.95Case 3 Time taken = 8 Hrs earnings = 8*10
= 8.94 * 1 = 8.94
Bedaux PlanStd Time= 10 HrsRate per Hr= Re 1Case 1 time taken= 12 Hrs Earnings = 12 * 1
= 12.00Case 2 Time taken = 8 Hrs earnings = 8*1
= 8.00Bonus:Bonus: Std Bs = 10*60 = 600Actual Bs = 8*60 = 480Bs saved = 120Bonus 75 * 120*1 = Rs 1.50 100 60Total earnings = 8+1.50 = Rs 9.50
Taylor’s Differential Piece-Rate Standard outputs: 100 UnitsRate per Unit: 10 paiseDifferential to be applied: 120% of piece-rate at or above the standards80% of piece-rate when below the standardsCase 1: Outputs = 120 units Earnings = 120* 120 * 0.10 = Rs 14.40
100Case 2: Outputs = 90 units
Earnings = 90* 80* 0.10 = Rs 7.20 100
Merrick Differential piece-rateStraight piece-rates less than 83% of the Std outputs110% of the base-piece rate for 83%-100% of the Std outputs120% of the base-piece rate for more than 100% of the Std outputsCase 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 unitsEfficiency = 90 *100 = 90%of
100Earnings: As the efficiency is 83% but less than 100%, 110% the base pie-rate applies:
90*110*0.10 = 9.90 100Case 3 Output = 110 unitsEfficiency = 110 *100 = 110%
100Earnings: As the efficiency exceeds 100%, 120% of the base piece-rate applies:
110*120*0.10 = 13.20 100
Gantt Task SystemRate per Hr =Re 0.50High piece-rate = Re 0.10Std Outputs = 80 unitsTime taken = 8 HrsStd Bonus = 20%
Case 1 Output = 70 unitsEarningsAs the output is less than the standard only time wages are paid to the worker
=8*0.50=Rs 4.00Case 2 Output =80 unitsEarningsAs the output is equal to the standard, the worker is entitled to time wage plus 20% bonusTime wages =8*0.50= Rs 4.00Bonus =20*4 = Re 0.80
100Total earnings = Rs 4.80Case 3 Output =110 unitsAs the output is more than th Std, the worker is entitled to a high piece rate10*0.10= Rs 11.00
Emerson’s PlanUp 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
Conditions for Effective Incentives PlansConditions for Effective Incentives Plans
Plan is clearly communicatedPlan is clearly communicated Plan is understoodPlan is understood Rewards are easy to calculateRewards are easy to calculate Employees participate in administering the planEmployees participate in administering the plan Employees believe they are being treated fairlyEmployees believe they are being treated fairly Employees believe they can trust the company Employees believe they can trust the company
and that they have securityand 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.