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incentive plans Free essay! Download now

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incentive plans

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Downloads to date: N/A | Words: 1845 | Submitted: 01-Jun-2011
Spelling accuracy: 97.1% | Number of pages: 17 | Filetype: Word .doc


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contains various incentive plans for employees in an organisation

Preview

INCENTIVE PLANS
Incentive plans envisage a basic rate usually on time basis applicable to all workers and incentive rates payable to the more efficient among them as extra compensation for their meritorious performance in terms of time, cost and quality.
Incentive compensation is called payment by result.
It is given to improve the motivation of employees.
And hence is paid like bonus or premium for additional work and this additional payment is termed as incentives.

According to The National Commission on Labour, “Wage incentives are extra financial motivation, they are designed to stimulate human effort by rewarding the person, over and above the time rated remuneration, for improvement in the present or targeted results.”
Features of Incentive Plan
Minimum wages are guaranteed to all workers
Incentives by way of bonus, etc. are offered to efficient workers for the time saved.
A standard time is fixed and the worker is expected to perform the given work within the standard time.
Advantages of incentive plan
Incentive schemes are beneficial to both workers and employers.
It increases the total wage of employees besides prescribed wages.
It provides an opportunity for hardworking and ambitious workers to earn more.
It increases production, so that the production cost decreases.
It motivates the workers to work more.
It helps to create team spirit among employees.
It facilitates better utilization of equipments, reduse scrap and reduce lost time.
Limitations of incentive plan
There is a possibility of reducing quality of products.
It will increase the danger of accidence.
Conflicts may arise among employees.
Workers may oppose introduction of new machines, methods etc.
Setting piece or bonus rates in incentive scheme is a difficult task.
Prerequisites of Sound Incentive Plan
1. Proper climate
2. Co-operation of Workers
3. Workers Participation
4. Scientific Standards
5. Simplicity
6. Equitable
7. Flexible
8. Less Costly
9. Wide Coverage
10. Careful Planning
11. Guarantee Minimum Wages
12. Sufficient Amount of Incentives
13. Ceiling on earnings
14. Grievance Settlement
15. Timely Payment
16. Review Rates
17. Follow Up

INCENTIVE PLANS ...

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