Incentive Systems (Hasley Plan, Rowan Plan & Taylor’s differential Piece rate System)

Halsey Premium Plan:

This plan known after F.A. Halsey is also called the Weir Premium Plan because it was first introduced in the Weir Engineering Works in England. Under this plan, a standard time is fixed (on the basis of past performance records and not on the basis of elaborate time study) for the completion of a job. A worker who completes his job in less than the standard time is paid at this hourly rate for the time actual spent on the job plus a bonus for the time saved.

Feature of Halsey Premium Plan:

(i) Standard time of production is determined well in advance.

(ii) The workers, who complete their work in less than standard time, are paid the wages according to the standard rate. They are paid a bonus also on the basis of time saved by him.

(iii) Standard rate of wages is also determined.

(iv) The workers, who complete their work within standard time, are paid the wages at the standard rate.

(v) The rate of bonus may be 33-1/3 or 50%.

Rowan Premium Plan:

This plan was introduced by James Rowan. Under this method, the standard time and the standard rate of wage Payment are determined in the same manner as Halsey Plan. The workers, who complete their work within standard time, are paid the wages at standard rate. The workers, who complete their work in less time than the standard, are paid wages at the standard rate plus some bonus. This bonus is calculated in proportion of time saved.

Features of this plan:

1. Standard time of work is decided.
2. The workers, who complete their work in more time than standard, are also paid the wages according to standard rate. Thus, in this system also there is no provision of punishment for late completion of the work.
3. Standard rate of wage is decided.
4. The workers, who complete their work within standard time, are paid the wages according to standard time.
5. The workers, who complete their work before standard time, are paid wages according to standard rate plus some bonus.
6. Bonus is calculated in the ratio of time saved with standard time.

Merits of Rowan Premium Plan are as under:

1. It checks over-speeding because the workers cannot get bonus more than 25% of the standard time.
2. This method of incentive wage plan is based upon scientific calculations.
3. The workers get higher bonus under this system.

Taylor Differential Piece Rate System:

This system was introduced by Mr. F.W. Taylor. Under this system, standard time for every work is determined on the basis of time and motion study. Two rates of wages are determined-as High rate and Low rate. The workers, who complete their work within standard time or before standard time, are paid wages according to the high rate. The workers, who complete their work in more time than standard time, are paid the wage according to lower rate.

Basic Features of Differential Rate System:

1. The workers, who complete their work in more time than the standard time, are paid the wages at lower rate.
2. Two rates of wages are determined i.e., Higher rate and Lower rate.
3. Standard time of the work is determined.
4. The workers, who complete their work within standard time or before standard time, are paid the wages at high rate.

Important merits of Taylor Differential Piece Rate System are as follows:

1. This system helps in reducing the cost of production per unit.
2. This system is based upon scientific calculations, proper work and job standardisation.
3. Most important merits of this system are that it rewards an efficient worker and penalises the inefficient worker.
4. This system helps in eliminating the workers who are quite inefficient, because in the course of time, they will try to get the work elsewhere.
5. This system is very easy to understand and to calculate.

Demerits of Taylor Differential Piece Rate System:

1. If the standard work of a worker is less than his normal capacity it causes great dissatisfaction among the workers.
2. The greatest demerit of this system is that it does not guarantee minimum wages. Therefore, it is opposed by the labour unions.
3. This system classifies the workers into two categories; efficient and inefficient.
4. This system helps in eliminating the workers who are quite inefficient, because in the course of time, they will try to get the work elsewhere.
5. This system is very easy to understand and to calculate.