Factors for Selecting Incentive Scheme

The following factors should be considered for selecting an incentive scheme:

1. Productivity

The object of the incentive scheme is to increase productivity. Therefore, this factor is very important. The increased productivity lowers the cost to the benefit of the employers.

2. Simplicity

The scheme should be simple in operations and well understood by the workers. The scheme should be amenable to the setting up of standards and the comparison of the results with the actual.

3. Cost Reduction

The scheme, when introduced, is bound to increase the pay-bill of the workers, and thus increase the cost. But the simultaneous increase in production would reduce the cost per unit or production. The fixed overheads remain constant up to a certain limit of plant capacity. As such, the increased productivity reduces the cost of fixed overheads per unit.

4. Better Labour Psychology

The scheme should not affect worker’s health adversely, should reduce labour turnover and help to improve the standard of living of the workers.

Under this heading, we study the following methods:

(I)                 Halsey Premium Scheme;

(II)              Halsey Weir Scheme;

(III)            Rowan Premium Scheme;