Which one of the following wage incentive plans is highly disadvantageous to workers?

Explanation:

Straight piece rate system:

• Under the straight piece rate plan workers are paid based on their output.
• For example, if the piece rate is Rs. 5 per piece of the product, then a worker who turns out 50 pieces/day earns Rs. 250 (Rs. 5 x 50) as his wage for that day. Whereas, another employee who produces 40 pieces/ day earns Rs. 200 (Rs. 5 x 40 pieces). Hence a fast worker earns more compared to a slow worker.

• It Motivates the workers to increase their output and improve productivity.
• However, there is no guaranteed minimum wage. This makes workers insecure. There is a great disparity in earnings between slow and fast workers.
• Quality of production may suffer as the workers concentrate on quantity.
• Enforced idleness like electricity failure or machine breakdown, adversely affects the earnings of workers.

Hasley 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, he is given a bonus. But there is no penalty for performing the job in more 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 the 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 wage and does not penalize a slow worker. A standard time is fixed for the completion of a job and a bonus is paid 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.

Differential Piece rate system:

• The underlying principle of this system is to penalize a slow worker by paying him a low piece rate for low production and to reward an efficient worker by giving him a higher piece rate for higher production.
• To encourage the workers to complete the work within the standard time, Taylor advocated two-piece rates, so that if a worker performs the work within or less than the standard time, he is paid a higher piece rate, and if he does not complete the work within the standard time, he is given a lower piece rate.