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Incentives Programme

Wage incentives include all the plans thatprovide extra pay for extra performance Inaddition to regular wages for the job.

It implies monetary inducements offeredto employees to perform beyondacceptance standards.

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Different Types of Variable

Pay PlansCash Profit Sharing

Stock Ownership or

Options

Balanced Scorecard

Productivity / Gain-

SharingTeam / Group

Incentives

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Short Term Pay-for-Performance

Plans

Merit Pay

Lump-Sum Bonuses Individual Spot Awards

Individual Incentives

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Long-Term Incentive Plans

Employee Stock Ownership Plans

(ESOPs)

Performance Plans (Performance

Share and Performance Unit)

Broad-Based Option Plans (BBOP)

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Individual Incentives

Under a system of individual incentives,all or a portion of an individuals pay istied to their performance.

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Group Incentives

Improve OrganizationalPerformance

Organizational Measures Measured Periodically

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Team / Group Incentive Plans

Gain-Sharing Plans

Profit Sharing Plans

Earnings-at-Risk Plans

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IndividualIncentive Plans

Method of Rate DeterminationUnits of production per

time periodTime period per unit of

production

(1) (2)

(4)(3)

Straight piecework plan Standard hour plan

Bedeaux plan

Halsey 50 - 50 method

Rowan plan

Gantt plan

Taylor differential piece

rate system

Merrick multiple piece

rate system

Pay constant function of

production level

Pay varies as function ofproduction level

Relationship

between

production level

and pay

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Types of Incentives PlansThe ILO classifies all the schemes of payment by results into

four categories:

Earning vary in

the same proportionas output

Straight Piece Work

Standard Hour

Earnings vary

lessproportionately

than output

Halsey Plan

Rowan Plan

Barth Scheme

Bedaux Plan

Earnings vary

Proportionately

More than outputs

High Piece Rate

High Standard Hour

Earnings differ

at different levels

of output

Taylors Differential

Piece Rate

Merrick Differential

Piece Rate

Gantt Task System

Emersons Efficiency

plan

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Halsey Plan

Rowan PlanBarth Plan

Bedaux PlanTime - Based

Output - Based

Taylors Differential Piece Rate

Merrick Differential Piece Rate

Gantt Task System

Emersons Efficiency plan

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Conditions for Effective Incentives

Plans Plan is clearly communicated

Plan is understood

Rewards are easy to calculate

Employees participate in administering theplan

Employees believe they are being treatedfairly

Employees believe they can trust thecompany and that they have security