Tuesday, May 17, 2011

Summarise the recent trend of reward systems in India.

Summarise the recent trend of reward systems in India. Analyse it with respect to your organization or an organization you are familiar with and discuss its impact on productivity. Describe the organization you are referring to.

Ans. The various incentive plans can be classified into-two groups:
(a) Individual Incentive plans, and
(b) Group incentive plans
• Halsey premium plan:-
Halsey premium plan is a simple combination of time and speed bases of payment. Under this plan, a minimum time wage is guaranteed to every worker. A standard time is fixed for the completion of a job. If a worker performs his job in less than the standard time fixed. The slow worker is paid the time wages and the efficient worker is paid some bonus in addition to the time wages. The bonus is in proportion of the wages which he could have earned during the time saved.
• Rowan plan:-
The Rowan plan is a modification of the Halsey plan. It also guarantees the minimum time wages and does not pernlise a slow worker. A standard time is fixed for completion of a job and bonus to a worker on the basis of time saved. Here, the bonus is that proportion of the wages for the time taken which the time saved bears to the standard time. Efficiency is thus measured as,

As the time saved increases, time taken will be reduced and as such the bonus would increase at a diminishing rate. This will check over speeding and overcome the major drawback of Halsey plan.
• Emerson’s Efficiency Plan:-
In his plan, Emerson suggested guaranteed wage payment to all workers on time rate basis. In addition, bonus or extra payment was suggested to those who prove to be efficient. For determining efficiency, standard output per unit of time or standard time for the job is determined. Efficiency is to be measured on the basis of comparison of actual performance with the standard fixed.
• Bedeavx Point Plan:-
In this plan, the minute is the time unit described as the standard minute and accounted as Bedeavx point B. In determining the Bs, the time of operation and the time of rest are taken into account. Thus, B may be defined as a fraction of a minute of effort plus a fraction of a compensating rest always aggregating unity. The standard time for each job is fixed after undertaking time and motion study and expressed inn terms of B. The standard time for a job is the number of Bs allowed to complete it.
• Incentives:-
A Sales Department: The company has a sales force of 10 sales Engineers. They report to the sales Managers who in turn reports to the sales Manager who in turn reports to the Direction (Marketing).

The company makes its sales targets and accordingly distribution it among sales. Engineers catering to different territories. Since most of the business comes straight to the company from OEM manufacturers, so every engineer is given an approximate target of 2.5 lakhs per month and is offered 5 percent commission on his total sales. There is no incentive on sales less than Rs 1 lakh. The Branch Managers (sales) receives 2 percent commission of the total sales made by his engineer. On an average an engineer is able to make a monthly sale Rs1000 per month as incentives. The Branch Manager similarly receives approximately Rs 4000 as incentives/month.
B. Service Department:-
The company has a servicing team of ten engineers whose qualifications are similar tot he sales engineers. Servicing engineers have the benefit of an incentive scheme which is based on the following parameters.
1. Response Time and Breakdown Time.
2. Number of preventive Maintenances done per month.
3. Number and values of spare parts consumed.
4. Number of complaints received per month.
A service engineer has to give a response time of more-than 80 percent with in the Time limit given by the company. After a lot of hard work and optimum use of spare parts one service engineer is able to get a monthly incentive of Rs 250-300 per month. If the number of spare parts used crosses a certain limit, it affects the incentive amount of the engineer.

1. Since the per month income of a sales engineer is more than that of a service engineer, the satisfaction level in the sales department is naturally higher.
2. Due to those income disparities the job turnover in the service department is higher than in the sales department.
3. The sales personnel have no defined upper limit on sales incentives and these keep on increasing percentage wise with an increase in sales. But there is a defined limit on incentives received by the service engineer which results in further disparities in the income level of the two.

No comments:

Post a Comment

Blog Archive