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Incentive system Free essay! Download now

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Incentive system

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Downloads to date: N/A | Words: 2307 | Submitted: 05-Dec-2011
Spelling accuracy: 98.1% | Number of pages: 7 | Filetype: Word .doc

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compensation incentives


In many industries or undertakings and for a large group of operations well-designed systems of payment by results shall yield advantages to all concerned. Many of these benefits shall be realized when sufficient safeguards are provided. Such prerequisites are:
The co-operation of workers in the implementation of an incentive scheme is essential because the employees somehow devise, if they do not like a scheme, ingenious ways of evading or sabotaging the plan, often with the tacit connivance of the foreman of supervisor. Worker’s cooperation may be secured through proper discussion with their representatives.

In particular, worker’s co-operation is necessary in:

the methods followed in measuring the results or output upon which payment is based
the methods followed in setting wage rates for different classes of work and
appropriate safeguards concerning earnings, job security and settlement of disputes over piece-work rates and allotted time.
To prove that the schemes were often introduced without workers’ co-operation and consequently met with failure we quote the following:

‘ .. the practice adopted by several industrial establishments in the Mumbai region in regard to the preparation of an incentive scheme is to hire an industrial consultant and to make him work in the establishment under the cloak of secrecy, until a scheme has been finally prepared. It is only after several months that the workers of the establishment and their unions begin to suspect that some scheme is under preparation. Trade union leaders, who are not employees currently, are not even allowed to watch how standards have been evolved. Naturally, the workers reject out-of-hand, a scheme prepared so surreptitiously.’

The scheme must be based on scientific work measurement. The standards set must be realistic and must motivate workers to put in better performance. Workers must be provided with necessary tools, materials and equipments so as to enable them reach their standards.
Indirect workers, such as supervisors, foremen, charge hands, helpers, crane operators, canteen staff, store keepers and clerical staff should also be covered in the incentive scheme.
There should be management commitment to the cost and time necessary to administer incentive schemes properly and these must be carefully assessed before embarking on an incentive program. There are many situations in which the potential gains are just not worth the cost and effort involved. It also means a commitment in terms of integrity to the spirit as well as the letter of the programme – having the courage to abide by it when the payout deteriorates and the honor to own up when the results are not forthcoming.

There is a greater need for planning. Many incentive schemes, started hurriedly, planned carelessly and implemented indifferently have failed and have created more problems for the organization than they have tried to solve. This was what happened to ...

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