INCENTIVE PLANS AND FRINGE BENEFITS INCENTIVE PLANS MEANING

INCENTIVE PLANS AND FRINGE BENEFITS

INCENTIVE PLANS

MEANING : Incentive are the rewards to an employee , over and above his base wage salary, in recognition of his performance and contribution. “An incentive scheme is a plan or programmes to motivate individual or group performance. An incentive programme is most frequently built on monetary rewards but may also include a variety of non-monetary rewards or prizes. ” BY- Burack and smith

CHARACTERISTICS OF INCENTIVE PLANS Ø Minimum wages are guaranteed to all workers. ØAn incentive plan may consist both monetary and non monetary elements.

ØThe incentives rates should made attractive. So that they get motivated and try to give their best. ØThe scheme should be explained and discussed with all employee & supervisors before it is implemented.

BENEFITS OF INCENTIVE PLANS ØImproved employer and employee relations. ØReduced turnovers. ØIncreased motivation. ØIncrease productivity. ØTeam work. ØIncrease objective achievements.

LIMITATIONS : ØPeer jealously & conflicts. ØDisregard safety regulations ØCostly. ØPoor health. ØQuality

ESSENTIALS OF A GOOD INCENTIVE PLAN ØAttainable standards ØSimplicity. ØEconomical. ØPrompt payment. ØHealth and welfare. ØStability. ØJust and equitable. ØAttraction for workers.

TYPES OF WAGE INCENTIVE PLANS…

INDIVIDUAL INCENTIVE SYSTEMS… v. TIME BASED SYSTEMS…. HALSEY PLAN ROWAN PLAN EMERSON PLAN v. PRODUCTION BASED SYSTEMS… TAYLOR’S DIFFERENTIAL PIECE RATE SYSTEM GANTT’S TASK AND BONUS PLAN BEDEAUX PLAN

A. HALSEY PLAN… Ø FORMULA: T*R+[S-T/2]*R S=Standard time allowed T=Time taken R=Hourly rate B. ROWAN PLAN… Ø FORMULA: T*R+[S-T/2]*T*R S=Standard time allowed T=Time taken R=Hourly rate

C. EMERSON PLAN… Under this plan, bonus is 20% of wages earned at 100% efficiency and increases by 1% with every percent increase in efficiency. D. BEDEAUX PLAN… Under this plan, the standard time for each job is determined in terms of minutes which are called Bedeaux Points or B’s. Each B represents one minute through time and motion study.

PRODUCTION BASED SYSTEMS… q. TAYLOR’S DIFFERENTIAL PIECE RATE SYSTEM… The underlying principle of this system is to reward an efficient worker and penalise the inefficient person. In this inefficient person has no place in organisation. q. GANTT’S TASK AND BONUS PLAN… Under this, the workers are guaranteed minimum wages for taking standard time or more. A person taking less than the standard time gets time wages plus bonus.

GROUP INCENTIVE SYSTEMS… PRIEST MAN’S PLAN SCALON PLAN COPARTNERS HIP PROFIT SHARING

Fringe benefits may be defined as : Compensation in addition to direct wages or salaries, such as company car, house allowances, medical insurance, pension scheme etc. Fringe benefits are benefits that are in Kind : NOT money

FEATURES § Different from regular wages. �Beneficial to all employees. �These are indirect compensation. �Raise the living standards of employees. �These may be statutory or voluntary. �These involve labour cost for employer.

OBJECTIVES �To create and improve work environment and industrial relations. � To boost up employee morale. � To motivate the employees by identifying and satisfying their unsatisfied needs. �To provide security to the employees against social risks like old age benefits.

�To protect the health of the employees and to provide safety to the employees against accidents. � To promote employees welfare by providing welfare measures like recreation facilities. � To create a sense of belongingness and loyalty among employees. Hence, fringe benefits are called golden hand-cuffs. � To improve the public image of the organisation.