Suggestion Schemes

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Suggestion Schemes. Prepared by: Bhakti Joshi Date: January 30, 2013. Meaning. Who do the real work?. Focus on employees Ideas for improvement and innovation Target creative minds and talent. What kind of processes are required?. How are innovative products created?. - PowerPoint PPT Presentation

Text of Suggestion Schemes

  • Suggestion SchemesPrepared by: Bhakti JoshiDate: January 30, 2013

  • MeaningFocus on employees

    Ideas for improvement and innovation

    Target creative minds and talent

    Who do the real work?How are innovative products created?What kind of processes are required?

  • Why Suggestion Schemes?...To avoid:Lack of consistency of purpose to plan product and service that will have a market and to sustain in market and create jobsEmphasis on short-term profitsPersonal review systems, or evaluation of performance, merit rating, annual review, etc. for people in management, the effects of which are devastating. Job hoppingUse of visible figures and considering information that are unknown or unknowableExcessive medical costsExcessive costs of liability

  • Wage Incentive PlansA system which provides additional pay (or bonus) for qualitative and quantitative performance which exceeds standard or normal levels

    Relationship buildingIncreasing productivityEmployee moraleEmployee motivationEmployee regularity Cost controlImprovement in quality of lifeOptimum resource utilisationFlexibility in changing business conditions

  • Types of Wage Incentive Plan

  • Straight Piece RateExample: If a worker produces 325 pieces per day and he is paid at the rate of Rs.0.20 per piece, the daily wage is 325 0.20 = Rs.65?

  • Straight Piece with minimum guaranteeIf output > expected or standard production then:

    Wages = Base wage + (Current Output Standard Production) X Wage RateExampleThe standard output in a hypothetical welding shop is 110 pieces per day. For a production less than or up to the standard output, the minimum guaranteed or daily base wage is Rs.70. Over the standard output an incentive at the rate of Rs.0.50 per piece is given.If the output is 150. What is the total wage?Rs 90

  • Time Taken (T)Standard time (S)Current Wage (R)Incentive for time saved (Bonus percentage)Conditions:Time Taken < or = Actual TimeTime taken > Actual Time (No incentive)Halsey Premium Plan

  • When T < or = STotal Wages (W) = S*R + S*R*Bonus rateExampleIf the standard time taken to produce 10 units is 240 hours and the actual time taken is 220 hours, with average wages of Rs 4 per hour and 50 % bonus. What is the wage rate under Halsey Premium Plan? Halsey Premium Plan (Contd)1440

  • When T > STotal Wages (W) = S*R + R *(S-T)/100 (No bonus)ExampleIf the standard time taken to produce 10 units is 240 hours and the actual time taken is 260 hours, with average wages of Rs 4 per hour and 50 % bonus. What is the wage rate under Halsey Premium Plan? Halsey Premium Plan (Contd)959.20

  • Time Taken (T)Standard time (S)Current Wage (R)Incentive for time saved (No bonus percentage)Conditions:Time Taken < or = Actual TimeTime taken > Actual Time (No incentive)Rowan Plan

  • When T < or = STotal Wages (W) = S*R (No bonus)ExampleIf the standard time taken to produce 10 units is 240 hours and the actual time taken is 220 hours, with average wages of Rs 4 per hour and 50 % bonus. What is the wage rate under Rowan plan? Rowan Plan (Contd)960

  • When T > STotal Wages (W) = S*R + R *[(S-T)/S] (Never a bonus but an incentive to improve)ExampleIf the standard time taken to produce 10 units is 240 hours and the actual time taken is 250 hours, with average wages of Rs 4 per hour and 50 % bonus. What is the wage rate under Rowan plan? Rowan Plan (Contd)959.83

  • Differences & ComparisonsStraight Piece RateAdvantagesDisadvantagesSimple and easy to understandFocus of ProductivitySatisfaction to efficient and fast workersNo quality focusNo job securityNo compensation for breakdown or sicknessNo guarantee of minimum wageDiscourage group effortStraight Piece Rate with minimum guaranteeEncouragement for higher productionEfficient methods can be adopted to increase productionEasy to prepare quotation estimates and budgetsNo pay for idle timeLess supervision cost

    No standardised basis for minimum guaranteeBeginners and average workers cannot earn enough due to inability to work fasterQuantity will be overemphasised than quality (unless there is close supervisionOverwork and health concernsNot suitable for intermittent work Not suitable when jobs are unstandardised

  • Differences & ComparisonsHasley premium PlanAdvantagesDisadvantagesSimpleBeneficial for efficient workerCauses no harm to trainee, new or slow workerBenefits sharingMinimum base-wage guaranteedWorkers get a small percentage of return over their achievementQuality may suffer due to over-achievementManagement gets a wrong picture of workers abilityRowlan PlanChecks over-speeding overstrain by workersAssured minimum base-wageEfficiency is rewardedDiscourages workers to over-achieveDifficulty in ascertaining wages as it requires large data processingSharing of profit for over-achievement may not be liked by workers

  • Wages in IndiaThree types of wages: Minimum wages, Living wages, Fair wagesMinimum wages (Revision every 5 years):3 consumption units for 1 earnerMinimum food requirements of 2700 calories per average Indian adultClothing requirement of 72 yards per annum per familyRent corresponding to minimum area provided for under Governments Industrial Housing SchemeFuel, lighting, etc expenditures that constitute to 20% of the total minimum wagesChildren education, medical requirement, minimum recreation, etc that constitutes to 25% of the total minimum wageLocal conditions and other factors affecting wages

  • Wages in India (Contd)Minimum wages (Revision every 5 years):Maharashtra state has devised minimum wages in agriculture as follows

    Variable Dearness Allowance: To protect minimum wages from inflation (CPI)*Scheduled employment means an employment specified in the Schedule or any process or branch of work forming part of such employment

    Scheduled Employment*Category of WorkersZoneBasic Minimum WagesV.D.ATotal Minimum Wage (Rs/Day)AgricultureI120.00No120.00II110.00110.00III105.00105.00IV100.00100.00

  • Wages in India (Contd)

    Scheduled EmploymentCategory of WorkersZoneBasic Minimum WagesV.D.ATotal Minimum Wage (Rs/Day)Automobile Repairing Workshops and GaragesUnskilledI73.0853.31126.38Semi-skilledI76.9253.31130.23SkilledI80.7753.31134.08UnskilledII69.7353.31122.54Semi-skilledII73.0853.31126.38SkilledII76.9253.31130.23UnskilledIII65.3853.31118.69Semi-skilledIII69.2353.31122.54SkilledIII73.0853.31126.38

  • Wages in India (Contd)Living WageMore than the minimum wageConsiders national incomePaying capacity of industrial sectorFair wageAbove minimum wage (lower-limit) and below living wage (upper-limit)Factors: labour productivity prevailing wage rate, level of national income and its distribution and capacity of industry to pay

  • Components of Employee RemunerationBasic WagesIncentivesFringe BenefitsProvident fundMedical careAccident reliefHealth and group insuranceCar and its maintenanceClub membershipPaid membershipFurnished houseStock option schemeJob contextChallenging jobResponsibilitiesGrowth prospectsSupervisionWorking conditionsJob sharing etc.

  • Process of managing compensationOrganisational StrategyCompensation policyJob analysis and evaluationAnalysis of contingent factorsDesign and implementation of compensation planEvaluation and review

  • Job Evaluationis a process of determining the relative worth of a job.Aims atReduction in inequalities in salary structureSpecialisationSelection in employeesHarmony between employees and managerStandardisationCreating relevance for new jobs

  • Job Evaluation: Pre-requisitesJob content job description and specificationTop management supportCooperation of union and individual workersComparison of JobsInvolvement of expert in job-evaluation techniques

  • Job Evaluation MethodsNon-Analytical MethodsAnalytical MethodsRanking MethodClassification MethodFactor ComparisonPoint MethodMethods designed on the basis of the jobs as a wholeMethods designed on the basis of the requirements and elements of the jobs

  • Ranking MethodWorth of a job based on:Judgement of skillEffort (physical and mental)Responsibility (supervisory and fiscal)Working conditionsRanked in descending order from best to worstProcesses:Identify and place in order a number of clearly differentiated and well-defined benchmark jobs at various levels. (benchmark jobs as in producers, maintainers, administrators, etc)Jobs are perceived to be the ones with the highest and lowest value; selecting a job mid-way and finally choosing others at lower or higher intermediate points. The remainder of the jobs are grouped as key jobs and ranking is completeDivide the ranked jobs into grades and an initial estimate (based on common features among groups to bring about distinction between groups)

  • Ranking Method (Contd)Presentations and continuous iterationsSimple, quick and inexpensive only if agreement of the jobs and ranks are reached easily

    LIMITATION:Highly subjective.Not diagnostic to point the specific areas of weakness and strength of a worker. Existing jobs must be re-ranked to accommodate new positionRequires detailed knowledge of every job for evaluation and ranking and difficult when a large number of jobs are under consideration

  • Email: bhaktij@gmail.comWebsite: www.headscratchingnotes.net