6. Wages and Incentives Plan

Wage &

Incentive Plans

17Lecture

Straight Day-Work

Under this Scheme, the employer buys the time of the

worker.

Earnings E = T × R

T = Time in hours available for work in a day

R = Rate of pay, per hour in Taka

1-2Ridwan Al Aziz (Rivan), Lecturer,

Dept. of IPE, BUET

Piece Work

A uniform rate is paid to the workers for the amount

of work performed and not for the time he spends.

Earning E = n × R

n = output in number

R = Piece rate in Taka


Dept. of IPE, BUET

Incentive Plans

Based on Productivity

Taylor Plan

Merrick Plan

Gantt plan


Dept. of IPE, BUET

Based on Time

Halsey Plan

Rowan Plan

Emerson Plan

Bedeaux Plan

Taylor’s Differential Piece Work

A standard task n1 (units) is carefully established.

This standard task is called as “High Task”.

First of all, Taylor proposed that the workers

producing more than the standard unit will be paid at

high rate R2. The worker, who would fail to achieve

the standard task, will be paid at low piece rate R1.


Dept. of IPE, BUET


Dept. of IPE, BUET

Taylor’s Differential Piece Work

Merrick’s Multiple Differential Piece Work

That there should not be any penalty on the workers

and they should be assured of minimum wages (fair

days work = R3)

He proposed number of differentials in piece rate e.g.

• upto 70% of the standard task …………..Tk R3 (piece rate)

• upto 100% of the standard task ………….Tk R4 (increased

piece rate)

• upto 120% and above the standard task…..Tk R5 (increased

rate)


Dept. of IPE, BUET


Dept. of IPE, BUET

Merrick’s Multiple Differential Piece Work

Gantt Plan

That there should not be any penalty on the workers

and they should be assured of minimum wages.

If the worker fails to complete the task within the

standard time he receives only the wages for actual

time spent at the specified rate. But if he completes

the task within time he gets extra wages.


Dept. of IPE, BUET

Gantt Plan

Standard time = 10 hours

Rate = Tk 8 per hour

Bonus = 25% of the standard time

If the worker finishes his job within 8 hours he will get

Tk 80 plus 25% of the day’s wages i.e. 80 × 25% = 20

that means total Tk 80 + 20 = Tk 100.

So he will get bonus for 8 hours work.


Dept. of IPE, BUET

1-11

Halsey Plan

Ridwan Al Aziz (Rivan), Lecturer,Dept. of IPE, BUET

R = Base rate guaranteed on hourly basis

N = Total pieces are to be produced

N2 = Low task in pieces per hour

T = Time required for making N pieces

P = Percentage of the workers share in gain of above task.

It is generally varying from 25% to 50%

S = Standard time for the job on the basis of data =

(S-T) = Time saved by the worker

E = Wages for the job = RT + p (S-T) R


Dept. of IPE, BUET

Halsey Plan

Guaranteed base rate = Tk 25 per hour.

Total piece to be produced = 300 pieces.

Standard Task= 100 pieces/hour.

Low task would be 75% of the standard task.

The worker took 2 hours to complete the

job.

Percentage of the workers’ share in the gain

of above task is 40%.

Hence calculate the rate of incentive per

hour for the worker.


Dept. of IPE, BUET

Halsey Plan

Guaranteed base rate = Tk 25 per hour. Total piece to be produced = 300 pieces.

Standard Task= 100 pieces/hour, Low task would be 75% of the standard task.

The worker took 2 hours to complete the job. Percentage of the workers’ share

in the gain of above task is 40%. Hence calculate the rate of incentive per hour

for the worker.

Solution:

R = 25 Tk/hour, N = 300, N2 = 100× 75% = 75, T = 2 hours, p = 40% =

0.4

S = hours

Therefore, E = = RT + p (S-T) R= 2×25+ 0.4 (4-2) ×25 = 70 Taka

Per hour basis wage = 70/2 = 35 Taka per hour.

So, an incentive of (35-25) = 10 Taka per hour should be paid.


Dept. of IPE, BUET

Halsey Plan

Rowan Plan

• Mr. James Rowan proposed that the bonus should be

paid on the percentage of time worked rather than

time saved. The minimum wage was guaranteed.


Dept. of IPE, BUET

Emerson Plan

• The minimum wage was guaranteed.

• Efficiency is measured on the basis of the comparison

of actual performance with the standard fixed.

• If the efficiency is 100% the bonus would be paid at

20% and above 100% bonus at 30% would be paid.


Dept. of IPE, BUET

Bedeaux Plan

• Standard time for each job is fixed after undertaking

time and motion study expressed in terms of B.

• Generally the bonus paid to the worker is 75% of the

wages for time saved. The rest 25% goes to the

foreman.


Dept. of IPE, BUET

Bedeaux Plan

Standard time(S) = 360 B’s (6 hours × 60 minutes)

Actual time (T) = 300 B’s (5 hours × 60 minutes)

Wage rate (R) = Tk 10 per hour

Value of time saved = (360 – 300) / 60 × 10

= Tk 10

Total wages (W) = S × R + 75% of value saved

= 6 × 10 + 75 / 100 × 10

= Tk 67.5


Dept. of IPE, BUET

6. Wages and Incentives Plan

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