Page 136 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Managing Human Element at Work

Notes (ii) There is no encouragement for better performance: Merit is discounted and inefficiency
is at a premium as all receive the same salary. It is an unsound, unscientific and
arbitrary basis of wage payment.
(iii) Ambitious workers receive no monetary rewards for their talents.

(iv) It demands intensive and strict supervision.
Piece Wage System

It is based on the amount of work performed or productivity. The earnings of the employee
are directly proportional to his output or performance.
Features of Piece Wage System

(i) It can offer direct connection between effort and reward. Hence, it is the best method
to ensure higher productivity.
(ii) Wage cost determination is easy.

Advantages of Piece Wage System
(i) Direct connection between effort and reward.
(ii) It is simple and easy to understand.

(iii) The worker is interested in higher efficiency.
(iv) Cost accounting and control by management is made easy.

Disadvantages of Piece Wage System
(i) Danger of overwork. This leads to risk of accident and excessive fatigue.
(ii) We require a lot of supervision to maintain the quality and standard of work.
(iii) It is an ineffective method, if quality is to be given top preference.

6.2.5 Incentive Wage Plans
A system of wage payment which would maintain both quality and quantity is called
incentive wage plan and it is naturally a judicious combination of both basic systems of wage
payments, i.e. Time and Piece wages. Under the incentive plans of wage payment, both Time
Wage and Piece Wage systems are blended in such a manner that the workers are induced
to increase their productivity.
Essentials of a Sound Wage Incentive Plan

(a) Measurement of the amount of work done.
(b) Establishment of standard output on the basis of which the incentive has to be worked
out.
(c) Setting up a suitable rate of incentive.

Types of Incentive Plans

Halsey Plan
It is a plan originated by E.A. Halsey to encourage efficiency amongst workers as well as
to guarantee them wages according to time basis. The standard time required for a job is
determined beforehand on the basis of time and motion studies. Workers who perform the
job in less than the standard time and thus save time are rewarded with a bonus but the
worker who takes longer than the standard time is not punished, and is paid wages

130 LOVELY PROFESSIONAL UNIVERSITY