what is a reward payment of systems? too methods of reward payment
What is a Systems of reward payment?Meaning of systems of reward payment
The success of a concern largely depends upon the efficiency of labour too the efficiency of labour is considerably affected past times the amount of reward paid to them. Some personal are
Method or scheme of reward payment must possess the next characteristics:
• Should live on unproblematic to operate too piece of cake to understand.
• Should guarantee a minimum wage to every worker.
• Should live on acceptable to the employer too the employee.
• Should live on flexible plenty then the changes may live on made according to the requirements.
• Should ensure the establishment of industrial peace.
The regulation methods of reward payment are as follow:
1. Time charge per unit of measurement system
2. Piece charge per unit of measurement system
3. Incentive wage scheme (payout plan)
Piece charge per unit of measurement system
In this method, reward are paid to the employees later completion of work. Under it, a worker is paid on the terra firma of output. Not the fourth dimension past times him to perform the work. This is i of the simplest too most commonly used systems of reward payment. In this system, the wage charge per unit of measurement is expressed inwards price of per unit of measurement of output, per chore or per work-order. This amount of reward payable to a workman nether this method is to live on calculated as follows:
Total reward = total output x reward charge per unit of measurement per unit of measurement of output
=output units x unit of measurement rate
=actual yield x unit of measurement or slice rate
This scheme is suitable inwards the following cases:
• Where a piece of work is of a repetitive natures.
• Where the measure of piece of work is simple.
• Where the lineament too accuracy of output is non real important.
• Where strict supervision is non possible.
Advantages of slice charge per unit of measurement system
The primary advantages of slice charge per unit of measurement systems are as follows:
a. Simplicity: only similar fourth dimension charge per unit of measurement system, the slice charge per unit of measurement scheme is also unproblematic to operate too piece of cake to understand. It does non involve tedious calculations.
b. Incentive to workers: This scheme provides an increment to the workers to piece of work hard as the reward are paid on the terra firma of quantity of output non on the terra firma of time. So efforts too rewards are correlated.
c. Ascertainment of accurate labor cost: since the reward are paid on the terra firma of output, the exact toll of labour per unit of measurement of output or chore tin live on considerable.
d. No payment for idle time: nether slice charge per unit of measurement system, whatever payment is made to the workers for the idle fourth dimension as a resultant of which the toll of supervision is non considerable.
e. Proper aid too operate of machine too tools: the workers rake proper aid of their machine too tools since breakdown of machine too tools way decrease inwards output resulting inwards less remuneration to them.
Disadvantages of slice charge per unit of measurement system
This scheme has the next disadvantages:
a. Less attending to quality: as the payment of reward is made on the terra firma of output, the workers, inwards gild to maximize their output, piece of work with sense of hurry, which may demeanor upon the lineament of the output adversely.
b. Inefficient operate of machine too materials: since the reward are paid on the terra firma of quantity of output, an excursive wastage of materials too frequent breakdown of mechanism may live on caused past times the workers due to their efforts to obtain maximum output.
c. No guarantee of minimum wages: since at that spot is direct human relationship betwixt lineament of output too wages, the workers endure if they neglect to piece of work efficiently. There is no guarantee of minimum daily reward o workers.
d. Dissatisfaction with inefficient workers: the inefficient workers, who piece of work slowly, travel dissatisfied past times argue of lower reward as compared to the reward paid to their efficient counterparts.
e. Adverse effect on worker's health: the worker may attempt to abnormally to earn to a greater extent than which has an adverse effect on their wellness too efficiency. So, this method is non accepted past times merchandise union.
Under this system, the amount of remuneration or the total reward payable to the workers depends on the fourth dimension for which he is employed. This is unproblematic too mutual method of reward payment. In this method, the workman is paid an hourly, daily, monthly or yearly charge per unit of measurement rat of wages.Read More..
Thus the worker is paid on the terra firma of fourth dimension too non on his performance or unit of measurement of output. The amount of reward payable to a workman nether this method is to live on calculated as follows:
Total reward = actual fourth dimension convey x fourth dimension rate
Or, total reward = total hours worked x reward charge per unit of measurement per hour.
This method is suitable to live on applied inwards the next circumstances:
• Where the lineament of piece of work is to a greater extent than of import than production.
• Where the mass of production is non inside the command of labour.
• Where it is hard to ready the unit of measurement of output.
• When it is mass of production is non inside the command of labour.
• The nature of piece of work is such that at that spot is no terra firma for incentive plan.
• Where the amount of output cannot live on accurately measured, counted too standardized.
Advantages of fourth dimension charge per unit of measurement system
This method is widely used fifty-fifty at the introduce fourth dimension on job organization human relationship of the next advantages:
a. Simplicity: it is real piece of cake to empathise too unproblematic to calculate the earnings of worker nether this method.
b. Guarantee of minimum wages: it guarantees a minimum reward to the workers.
c. Quality production: since this amount of reward is non linked with the quantity of output, this method ensures production of amend lineament due to the careful attending of the workers.
d. Unity with workers: nether this method, all workers falling nether a particular category are paid at equal charge per unit of measurement without whatever consideration of their quantity of output. It encourages a feeling of equality with workers on job organization human relationship of which this method is also favored past times merchandise unions.
e. Economical: it involves less clerical piece of work too detailed records are non necessary. Since the output is non the criteria for decision of wages, tool too materials are handled carefully. Wastage are also minimized.
Disadvantages of fourth dimension charge per unit of measurement system
This method has the next disadvantages:
a. No incentive to the efficient workers: This scheme lacks incentive to efficient workers since all works are paid as too no distinction is made betwixt efficient too inefficient workers. So efforts too rewards are non correlated.
b. Go-slow policy: the workers, inwards gild to earn higher reward for overtime work, may attempt to perform the worker slow which leads to increment inwards labor toll per unit.
c. Dissatisfaction with the efficient workers: the efficient workers are paid reward at the charge per unit of measurement equal to these payable ton inefficient workers, which creates dissatisfaction with the efficient workers.
d. Payment for idle time: nether this method, idle fourth dimension of the workers is also paid that increment the toll of production.
e. High toll of supervision: since at that spot is no direct link betwixt quantity of output too wages, wastage of fourth dimension on the component subdivision of the workers is common, the avoidance of which requires considerable supervision leading to increment costs.
Advantages of fourth dimension charge per unit of measurement system
This method is widely used fifty-fifty at the introduce fourth dimension on job organization human relationship of the next advantages:
a. Simplicity: it is real piece of cake to empathise too unproblematic to calculate the earnings of worker nether this method.
b. Guarantee of minimum wages: it guarantees a minimum reward to the workers.
c. Quality production: since this amount of reward is non linked with the quantity of output, this method ensures production of amend lineament due to the careful attending of the workers.
d. Unity with workers: nether this method, all workers falling nether a particular category are paid at equal charge per unit of measurement without whatever consideration of their quantity of output. It encourages a feeling of equality with workers on job organization human relationship of which this method is also favored past times merchandise unions.
e. Economical: it involves less clerical piece of work too detailed records are non necessary. Since the output is non the criteria for decision of wages, tool too materials are handled carefully. Wastage are also minimized.
Disadvantages of fourth dimension charge per unit of measurement system
This method has the next disadvantages:
a. No incentive to the efficient workers: This scheme lacks incentive to efficient workers since all works are paid as too no distinction is made betwixt efficient too inefficient workers. So efforts too rewards are non correlated.
b. Go-slow policy: the workers, inwards gild to earn higher reward for overtime work, may attempt to perform the worker slow which leads to increment inwards labor toll per unit.
c. Dissatisfaction with the efficient workers: the efficient workers are paid reward at the charge per unit of measurement equal to these payable ton inefficient workers, which creates dissatisfaction with the efficient workers.
d. Payment for idle time: nether this method, idle fourth dimension of the workers is also paid that increment the toll of production.
e. High toll of supervision: since at that spot is no direct link betwixt quantity of output too wages, wastage of fourth dimension on the component subdivision of the workers is common, the avoidance of which requires considerable supervision leading to increment costs.
Incentive reward payment plan
To take the defects of both fourth dimension charge per unit of measurement too slice charge per unit of measurement systems of reward payment, incentive plans receive got been developed. Under these plans, the advantages of fourth dimension too piece-wages scheme are combined, too incentives are provides to workers to piece of work hard. The characteristics of these plans are as follows:
i. Incentives past times way of bonus too other are given to efficient works for fourth dimension saved.
ii. A touchstone fourth dimension is fixed too the worker is to perform the given piece of work inside the touchstone time. The touchstone fourth dimension is laid later making fourth dimension studies for the performance of specific job.
The incentive is compromise betwixt the 2 extremities, on the one, if the workers are paid according to time, hi a nix if fourth dimension is saved too on the other hand, if they are paid on the terra firma of slice rate, employers larn nothing, if fourth dimension is saved. Under incentive plans, the employer as good as the workers shares the make goodness of fourth dimension saved, too both labour too overtime costs are reduced.
The incentive plans should live on selected according to the nature of piece of work too other circumstances. It should live on accepted past times the administration as good as labour otherwise it does non component subdivision successfully. The payment of reward may live on made according to whatever of the next plans:
i. Incentives past times way of bonus too other are given to efficient works for fourth dimension saved.
ii. A touchstone fourth dimension is fixed too the worker is to perform the given piece of work inside the touchstone time. The touchstone fourth dimension is laid later making fourth dimension studies for the performance of specific job.
The incentive is compromise betwixt the 2 extremities, on the one, if the workers are paid according to time, hi a nix if fourth dimension is saved too on the other hand, if they are paid on the terra firma of slice rate, employers larn nothing, if fourth dimension is saved. Under incentive plans, the employer as good as the workers shares the make goodness of fourth dimension saved, too both labour too overtime costs are reduced.
The incentive plans should live on selected according to the nature of piece of work too other circumstances. It should live on accepted past times the administration as good as labour otherwise it does non component subdivision successfully. The payment of reward may live on made according to whatever of the next plans:
Individual bonus plan
According to private bonus plan, the bonus of each worker is calculated separately. Some methods of calculating reward nether private bonus innovation are discussed below:
a. Halsey premium plan
This innovation was originated past times F.A. Haley. Under this scheme, an hourly charge per unit of measurement is guaranteed to all workers. Influenza A virus subtype H5N1 touchstone fourth dimension is fixed unit, chore or functioning on the terra firma of fourth dimension too shout studies too the worker is paid the agreed hourly charge per unit of measurement of reward for the actual fourth dimension taken summation a fixed percentages of bonus on the fourth dimension saved. The amount of bonus or premium payable to the workers inwards half of the reward of the fourth dimension saved.
Requirements for calculating total wages or total earning of the worker under. Halsey premium innovation are:
ST = touchstone fourth dimension or normal fourth dimension allowed
TT = fourth dimension taken
SR = touchstone fourth dimension charge per unit of measurement of wages
Time saved (TS = ST –TT
Advantages of Halsey premium plan
The advantages of Haley premium innovation are mentioned below:
i. It is unproblematic to empathise too operate.
ii. Every worker is guaranteed minimum reward too fifty-fifty the inefficient worker experience secured.
iii. It encourages efficiency with worker past times inducing them to complete their chore earlier the touchstone time.
iv. The make goodness from the fourth dimension saved is shared as past times receive got employer too the workman.
v. Generally workers make non oppose this method of wages, payment as it rewarded fourth dimension saved rather than increment output.
Disadvantages of Halsey premium plan
The disadvantages of Halsey premium innovation are mentioned below:
i. Workers are paid alone half of the reward on the fourth dimension saved. So the worker may oppose this method.
ii. The worker may perform to piece of work inwards hurry past times neglecting the lineament of output to salve fourth dimension too earn higher bonus.
iii. The touchstone fourth dimension fixed for finished a chore may non live on scientific.
b. Rowan premium plan
This innovation was originated past times David rowan. This innovation guarantees an hourly charge per unit of measurement to all workers. Influenza A virus subtype H5N1 worker is paid the fixed charge per unit of measurement per hr for the actual fourth dimension spent on the chore summation a premium or bonus based on the fourth dimension saved. The amount of premium or bonus is non a fixed percent of the reward of fourth dimension saved but it diverse according to the extent of the fourth dimension saved. The amount of bonus or premium payable nether this innovation depends on the percent of fourth dimension saved past times the workers. The bonus is calculated the such percent out of the terra firma wages.
Formula for to calculated total reward or total earning of the worker under, Rowan premium plan:
Basis reward = fourth dimension taken x touchstone fourth dimension charge per unit of measurement = TT x SR
Bonus = fourth dimension saved/ touchstone time
Total reward nether rowan innovation = terra firma reward = bonus = TT x SR = TS/SR
Effective reward charge per unit of measurement nether rowan innovation = total wages/TT
Advantages of rowan premium plan
The advantages of rowan premium innovation are mentioned below:
i. This innovation guarantees minimum reward too provides incentive for efficiency.
ii. It does non receive to rush through piece of work for increment bonus earning because the bonus increment at a decreasing charge per unit of measurement with higher levels of efficiency. Thus, an automate depository fiscal establishment check for limiting production of inferior quaintly of goods is ensured.
iii. The per unit of measurement fixed toll decrease with the increment inwards production
iv. The per unit of measurement fixed toll decrease with increment inwards production
v. Under this method, the per unit of measurement toll decrease due to decrease inwards per unit of measurement labour cost.
Disadvantages of Rowan premium plan
The disadvantages of Rowan premium innovation are mentioned below:
i. As the bonus is to live on shared past times employees too employees, it is non welcomed past times employees. They await total make goodness for their extra efficiency.
ii. The calculation earnings nether this method is comparatively complicated too fourth dimension consuming.
iii. The preparation of Lanzhou budget too estimated production labor toll are made hard past times the varying labor costs nether this plan.
iv. Payment nether this innovation is much less than that nether the Halsey innovation past times way of bonus below 50% of the fourth dimension saved.
Why rowan innovation is amend than Halsey plan?
• In the Halsey plan, bonus is usually laid at 50% of the fourth dimension saved. It does non serve as a potent incentive. On the other manus nether the Rowan plan, bonus is that proportion of the reward of the fourth dimension taken which the fourth dimension salve bears to the touchstone time; it serves as a potent incentive for increasing the efficiency.
• In the Rowan plan, the lineament of piece of work is non affected much. The worker is non induced to rush through the piece of work because bonus increases at a decreasing charge per unit of measurement at higher levels of efficiency. In the Halsye plan. Influenza A virus subtype H5N1 worker is induced to rush through the because he larn extra reward for every 50% of the fourth dimension saved.
• The effective labour rate per hr inwards the Rowan innovation is higher upwardly to 50% of the fourth dimension saved too falls at that spot later whereas inwards the Halsey plan, the effective labor charge per unit of measurement per hr upwardly to 50% of the fourth dimension saved too tin live on double thereafter. Usually, worker are non able to salve to a greater extent than than 50% of the fourth dimension allowed, then worker prefer the Rowan innovation for earning to a greater extent than wages
c. Taylor's differential slice charge per unit of measurement system
This scheme was originated past times F.W. Taylor, who knows a the "father of scientific discipline management". Taylor suggests that the worker producing the below touchstone degree live on paid according to the depression slice rate. Similarly, the worker producing at or inwards a higher house touchstone should live on paid according to high slice rate. For this, a touchstone fourth dimension is fixed too the worker who finished the assigned piece of work earlier the touchstone fourth dimension or at touchstone are paid at a higher charge per unit of measurement too the worker who cannot consummate the task inside the touchstone fourth dimension are paid at a lower rate. This touchstone should live on laid upwardly real accurately with the assist of fourth dimension too motion studies because it is the demarcating line for higher too lower too lower rates of wages. Thus, 2 piece-rates are fixed, i for those who perform the touchstone task inwards touchstone fourth dimension (may live on termed as efficient workers) too the other for those who perform less than the touchstone task inwards the touchstone charge per unit of measurement fourth dimension (may live on termed as inefficient worker). Usually rates are 120% too 80% of the piecework charge per unit of measurement for efficient too inefficient workers respectively.
Requirements for calculating total reward or earnings of the worker nether Taylor's differential slice charge per unit of measurement system:
Standard output/ touchstone yield:
Standard charge per unit of measurement per unit/ normal slice charge per unit of measurement = touchstone wage charge per unit of measurement for a period/ touchstone yield for the period
Advantages of Taylor's Differential piece-rate system
The advantages of Taylor's differential piece-rate systems are mentioned below:
i. This scheme provides a groovy incentive to workers to attain the touchstone output too the tedious workers e'er attempt to attain greater efficiency.
ii. The scheme is beneficial to workers as good as employers, since the workers larn reward at an increased charge per unit of measurement according to units produced too the employer larn increased output at lower toll of production.
Disadvantages of Taylor's differential piece-rate system
The disadvantages of Taylor's differential piece-rate systems are mentioned below:
i. This scheme is dissimilar to apply due to the fixation of dissimilar rates.
ii. The touchstone output cannot live on justified because if a worker only fails to arrive at the touchstone output, the depression charge per unit of measurement of reward volition live on given to him. However, if the only reaches the standard, higher charge per unit of measurement of reward volition live on payable to him.
iii. There is a groovy deviation of reward betwixt the higher too lower rates. It creates a large variation inwards the earnings of the workers too confection may emerge with them.
iv. Moreover, employer-employees relations may also live on stained; tankard is pose at a real high level.
d. Gantt's task too Bonus Scheme
This scheme was originated past times Mr. Gantt. This scheme is a combination of fourth dimension rate, differential piece-rate too bonus scheme too guarantees a minimum fourth dimension rate. Under this system, minimum reward are guaranteed to workers who neglect to arrive at the standard. If the output of the worker is below standard, the worker is paid guaranteed fourth dimension charge per unit of measurement or equal to touchstone output. In this system, depression charge per unit of measurement is non necessary to create upwardly one's hear total reward for below touchstone too if a worker's output is at or inwards a higher house standard, he is paid a high slice charge per unit of measurement (output 120% of normal rate) for the actual output. The remuneration nether this method is computed as follows:
Requirements for calculating total wages/earnings of the worker nether Gantt's task bonus plan:
Standard output/standard yield
Standard charge per unit of measurement per units/normal slice rate/guaranteed slice rate
High slice charge per unit of measurement for at or inwards a higher house standard, generally=120% of normal slice rate
Advantages of Gantt's Task too bonus scheme
The advantages of Gantt's Task too Bonus Scheme are mentioned below:
i. This scheme encourages the worker to improve the degree of performance.
ii. The workers experience that they are getting the reward, which they are entitled to. Thus, it promotes satisfactions with the employees.
iii. This method is real useful inwards jobs involving applied scientific discipline activities.
Disadvantages of Gantt's Task too Bonus Scheme
The disadvantages of Gantt's Task too Bonus Scheme are mentioned below.
i. Extreme aid is to live on exercised inwards fixing the guaranteed fourth dimension charge per unit of measurement too decision of touchstone output. Any mistake caused due to lack of experience volition Pb to unfavorable consequences.
ii. If the guaranteed fourth dimension charge per unit of measurement is fixed high, the incentive effect of the innovation volition deteriorate.
Group Bonus Schemes/What is a Group Bonus Schemes?
In the premium plans discussed then far, the bonus payable to an private was ascertained. Sometimes it is non possible to apply an incentive innovation to an private employees too it may live on possible to apply such a innovation to the grouping of employees only. The grouping bonus scheme is special applicable when the worker human activity inwards a grouping as a term. The grouping incentive plans tin live on successfully implemented where:
i. Output depends on teamwork too articulation efforts of grouping of workers.
ii. It is hard to mensurate the private resultant rather than group's result.
iii. It is necessary to piece of work as a fellow member of a squad rather than on private basis, e.g. inwards chemic procedure industry, an private worker cannot influence the production of the plant.
iv. Both direct too indirect workers demand to live on compensated equally.
v. Skills of the workers inwards the grouping make non vary widely.
Advantages of Group Bonus Scheme
The advantages of Group Bonus Scheme are mentioned below:
i. Increase inwards production too saving inwards toll of production tin live on achieved.
ii. Supervision toll volition live on reduced substantially.
iii. The lineament of piece of work is improved.
iv. Absenteeism is reduced to minimum too creates involvement inwards piece of work with the workers.
v. Routing too scheduling problems are eliminated.
vi. It creates squad spirit too reduces toll per unit.
vii. Minimizes waste materials too reduces toll per unit.
viii. Clerical piece of work inwards calculation of bonus is reduced.
Disadvantages of Group Bonus Scheme
The disadvantages of Group Bonus Scheme are mentioned below:
i. Individual science too efficiency are non considered inwards these systems.
ii. Difficult may arise inwards calculated of bonus too method of its distribution to all workers inwards the group.
iii. The bonus is paid on grouping efforts an private worker may non pose his maximum endeavor inwards stance of equal sharing of bonus to inefficient workers.
iv. An inefficient leader may campaign the entire grouping to suffer.
a. Priest man's plan
Under this system, touchstone output too touchstone fourth dimension for each subdivision is predetermined is consultation with the workers. Bonus is payable to the subdivision when the actual production exceeds the touchstone production. When the production does non top standard, no bonus is paid but times rates are guaranteed. The bonus is calculated as a percentages on such excess production too distributed to all employees inwards that particular subdivision past times increasing their normal reward past times the same percentages the actual production increased over the standard.
In this system, the fourth dimension reward are guaranteed if actual production of the particular division, department, too grouping is less than the touchstone output. This method is non alone applicable for excess of actual production over the touchstone but also saving inwards stuff too labour costs is also considered for payment of bonus. The primary drawback inwards this scheme is the efficiency of private worker is non considered too incident workers tin also claim for-bonus.
1. Write/what is the important of labour cost.
Labor toll refers to whatever remuneration paid to the employees past times the arrangement inwards the shape of wages, salary, bonus, allowances etc. for their fourth dimension too endeavor used inwards payable goods or services. In other words, mantel too physical sacrifice is called the labour cost.
The labour toll tin live on analyses into the following:
Monetary benefits: salaries too wages, dearness or other allowances, production incentive or bonus, overtime allowances, pension fund, payment for insurance scheme, former historic catamenia pension, retirement gratuity, salary inwards lien of leave, turn a profit linked bonus etc are the make goodness that are provided to the workers inwards monetary forms.
Non-monetary make goodness or fringe benefits: subsidized nutrient too housing, subsidized or gratuitous transportation, clothing, teaching to employee's c hidden, medical too recreational facilities etc. are the make goodness that are provided to the workers inwards non-monetary forms.
2. Write nearly direct too indirect labor cost.
The labour toll tin live on classified into direct too indirect too indirect labour toll as mentioned below:
a. Direct labour cost: direct labour toll is that portion of reward too salary, which tin live on identified too charged to a unmarried costing unit. It is remuneration of the employees who are direct unit. It is the remuneration of the employees who are straight connected with the manufacturing operations or the conversion of raw materials into finished products. The instance of direct labour toll is reward paid to workmen pose on definite jobs or products inwards the factory.
b. Indirect labour cost: indirect labour toll is the remuneration of the employees who are non straight connected with manufacturing with the conversion procedure but assist inwards the procedure past times way of supervision, maintenance, shipping of materials, materials treatment etc. their piece of work benefits all the items beingness produced too cannot live on specifically identified with the private product. These costs are accumulated too apportioned to dissimilar toll centers are accumulated too apportioned to dissimilar toll view on equitable terra firma too assorted into production toll past times applying the overhead absorption rate. Wages or salaries paid to the supervision, foremen, storekeeper, clerical staff, etc, are the instance of indirect labour costs.
3. Write whatever v differences betwixt direct too indirect labour cost.
The dissimilar betwixt the direct too indirect labour costs are mentioned below:
a. Meaning: direct Balfour toll is straight involved inwards the production but indirect toll is non straight involved inwards the production.
b. Volume of production: direct labour toll depends on the mass of production whereas indirect labour toll is separated.
c. Separation: direct labour toll tin live on separated inwards cost, toll center, or unit of measurement toll but indirect labour toll cannot is a direct expenditure.
d. Used: direct labour toll is used to convert raw materials into finished goods but indirect labour toll is used inwards the production process.
e. Payment: payment of direct labour toll is a direct expenditure and, payment of indirect labour is an indirect expenditure.
4. What is labour toll control?
Labour toll may live on real high due to inefficiency of labour, wastage of materials, idle fourth dimension too odd overtime, inclusive of dummy names inwards the pay rolls too other related factors. Inefficient uses of labour non alone increment the toll of production but also adversely affected the lineament of products. The primary objective of the management, therefore, is to utilize the labour as economically as possible. It is hence necessary for the administration to device a proper scheme of labour toll control.
Control over labour costs requires proper work too efficient utilization of labour force. These factors demeanor upon the toll too lineament of the products of whatever private task too ultimately its profitability. Laboru toll command involves work of efficient workers, proper preparation of workers, proper fourth dimension keeping too fourth dimension booking too proper accounting for the reward paid to them.
The advantages of Taylor's differential piece-rate systems are mentioned below:
i. This scheme provides a groovy incentive to workers to attain the touchstone output too the tedious workers e'er attempt to attain greater efficiency.
ii. The scheme is beneficial to workers as good as employers, since the workers larn reward at an increased charge per unit of measurement according to units produced too the employer larn increased output at lower toll of production.
Disadvantages of Taylor's differential piece-rate system
The disadvantages of Taylor's differential piece-rate systems are mentioned below:
i. This scheme is dissimilar to apply due to the fixation of dissimilar rates.
ii. The touchstone output cannot live on justified because if a worker only fails to arrive at the touchstone output, the depression charge per unit of measurement of reward volition live on given to him. However, if the only reaches the standard, higher charge per unit of measurement of reward volition live on payable to him.
iii. There is a groovy deviation of reward betwixt the higher too lower rates. It creates a large variation inwards the earnings of the workers too confection may emerge with them.
iv. Moreover, employer-employees relations may also live on stained; tankard is pose at a real high level.
d. Gantt's task too Bonus Scheme
This scheme was originated past times Mr. Gantt. This scheme is a combination of fourth dimension rate, differential piece-rate too bonus scheme too guarantees a minimum fourth dimension rate. Under this system, minimum reward are guaranteed to workers who neglect to arrive at the standard. If the output of the worker is below standard, the worker is paid guaranteed fourth dimension charge per unit of measurement or equal to touchstone output. In this system, depression charge per unit of measurement is non necessary to create upwardly one's hear total reward for below touchstone too if a worker's output is at or inwards a higher house standard, he is paid a high slice charge per unit of measurement (output 120% of normal rate) for the actual output. The remuneration nether this method is computed as follows:
Requirements for calculating total wages/earnings of the worker nether Gantt's task bonus plan:
Standard output/standard yield
Standard charge per unit of measurement per units/normal slice rate/guaranteed slice rate
High slice charge per unit of measurement for at or inwards a higher house standard, generally=120% of normal slice rate
Advantages of Gantt's Task too bonus scheme
The advantages of Gantt's Task too Bonus Scheme are mentioned below:
i. This scheme encourages the worker to improve the degree of performance.
ii. The workers experience that they are getting the reward, which they are entitled to. Thus, it promotes satisfactions with the employees.
iii. This method is real useful inwards jobs involving applied scientific discipline activities.
Disadvantages of Gantt's Task too Bonus Scheme
The disadvantages of Gantt's Task too Bonus Scheme are mentioned below.
i. Extreme aid is to live on exercised inwards fixing the guaranteed fourth dimension charge per unit of measurement too decision of touchstone output. Any mistake caused due to lack of experience volition Pb to unfavorable consequences.
ii. If the guaranteed fourth dimension charge per unit of measurement is fixed high, the incentive effect of the innovation volition deteriorate.
Group Bonus Schemes/What is a Group Bonus Schemes?
In the premium plans discussed then far, the bonus payable to an private was ascertained. Sometimes it is non possible to apply an incentive innovation to an private employees too it may live on possible to apply such a innovation to the grouping of employees only. The grouping bonus scheme is special applicable when the worker human activity inwards a grouping as a term. The grouping incentive plans tin live on successfully implemented where:
i. Output depends on teamwork too articulation efforts of grouping of workers.
ii. It is hard to mensurate the private resultant rather than group's result.
iii. It is necessary to piece of work as a fellow member of a squad rather than on private basis, e.g. inwards chemic procedure industry, an private worker cannot influence the production of the plant.
iv. Both direct too indirect workers demand to live on compensated equally.
v. Skills of the workers inwards the grouping make non vary widely.
Advantages of Group Bonus Scheme
The advantages of Group Bonus Scheme are mentioned below:
i. Increase inwards production too saving inwards toll of production tin live on achieved.
ii. Supervision toll volition live on reduced substantially.
iii. The lineament of piece of work is improved.
iv. Absenteeism is reduced to minimum too creates involvement inwards piece of work with the workers.
v. Routing too scheduling problems are eliminated.
vi. It creates squad spirit too reduces toll per unit.
vii. Minimizes waste materials too reduces toll per unit.
viii. Clerical piece of work inwards calculation of bonus is reduced.
Disadvantages of Group Bonus Scheme
The disadvantages of Group Bonus Scheme are mentioned below:
i. Individual science too efficiency are non considered inwards these systems.
ii. Difficult may arise inwards calculated of bonus too method of its distribution to all workers inwards the group.
iii. The bonus is paid on grouping efforts an private worker may non pose his maximum endeavor inwards stance of equal sharing of bonus to inefficient workers.
iv. An inefficient leader may campaign the entire grouping to suffer.
a. Priest man's plan
Under this system, touchstone output too touchstone fourth dimension for each subdivision is predetermined is consultation with the workers. Bonus is payable to the subdivision when the actual production exceeds the touchstone production. When the production does non top standard, no bonus is paid but times rates are guaranteed. The bonus is calculated as a percentages on such excess production too distributed to all employees inwards that particular subdivision past times increasing their normal reward past times the same percentages the actual production increased over the standard.
In this system, the fourth dimension reward are guaranteed if actual production of the particular division, department, too grouping is less than the touchstone output. This method is non alone applicable for excess of actual production over the touchstone but also saving inwards stuff too labour costs is also considered for payment of bonus. The primary drawback inwards this scheme is the efficiency of private worker is non considered too incident workers tin also claim for-bonus.
1. Write/what is the important of labour cost.
Labor toll refers to whatever remuneration paid to the employees past times the arrangement inwards the shape of wages, salary, bonus, allowances etc. for their fourth dimension too endeavor used inwards payable goods or services. In other words, mantel too physical sacrifice is called the labour cost.
The labour toll tin live on analyses into the following:
Monetary benefits: salaries too wages, dearness or other allowances, production incentive or bonus, overtime allowances, pension fund, payment for insurance scheme, former historic catamenia pension, retirement gratuity, salary inwards lien of leave, turn a profit linked bonus etc are the make goodness that are provided to the workers inwards monetary forms.
Non-monetary make goodness or fringe benefits: subsidized nutrient too housing, subsidized or gratuitous transportation, clothing, teaching to employee's c hidden, medical too recreational facilities etc. are the make goodness that are provided to the workers inwards non-monetary forms.
2. Write nearly direct too indirect labor cost.
The labour toll tin live on classified into direct too indirect too indirect labour toll as mentioned below:
a. Direct labour cost: direct labour toll is that portion of reward too salary, which tin live on identified too charged to a unmarried costing unit. It is remuneration of the employees who are direct unit. It is the remuneration of the employees who are straight connected with the manufacturing operations or the conversion of raw materials into finished products. The instance of direct labour toll is reward paid to workmen pose on definite jobs or products inwards the factory.
b. Indirect labour cost: indirect labour toll is the remuneration of the employees who are non straight connected with manufacturing with the conversion procedure but assist inwards the procedure past times way of supervision, maintenance, shipping of materials, materials treatment etc. their piece of work benefits all the items beingness produced too cannot live on specifically identified with the private product. These costs are accumulated too apportioned to dissimilar toll centers are accumulated too apportioned to dissimilar toll view on equitable terra firma too assorted into production toll past times applying the overhead absorption rate. Wages or salaries paid to the supervision, foremen, storekeeper, clerical staff, etc, are the instance of indirect labour costs.
3. Write whatever v differences betwixt direct too indirect labour cost.
The dissimilar betwixt the direct too indirect labour costs are mentioned below:
a. Meaning: direct Balfour toll is straight involved inwards the production but indirect toll is non straight involved inwards the production.
b. Volume of production: direct labour toll depends on the mass of production whereas indirect labour toll is separated.
c. Separation: direct labour toll tin live on separated inwards cost, toll center, or unit of measurement toll but indirect labour toll cannot is a direct expenditure.
d. Used: direct labour toll is used to convert raw materials into finished goods but indirect labour toll is used inwards the production process.
e. Payment: payment of direct labour toll is a direct expenditure and, payment of indirect labour is an indirect expenditure.
4. What is labour toll control?
Labour toll may live on real high due to inefficiency of labour, wastage of materials, idle fourth dimension too odd overtime, inclusive of dummy names inwards the pay rolls too other related factors. Inefficient uses of labour non alone increment the toll of production but also adversely affected the lineament of products. The primary objective of the management, therefore, is to utilize the labour as economically as possible. It is hence necessary for the administration to device a proper scheme of labour toll control.
Control over labour costs requires proper work too efficient utilization of labour force. These factors demeanor upon the toll too lineament of the products of whatever private task too ultimately its profitability. Laboru toll command involves work of efficient workers, proper preparation of workers, proper fourth dimension keeping too fourth dimension booking too proper accounting for the reward paid to them.
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