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

Minimum wages are guaranteed to all workers. An incentive plan may consist both monetary and non monetary elements.

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

BENEFITS OF INCENTIVE PLANS Improved employer and employee relations.Reduced turnovers.Increased motivation.Increase productivity.Team work.Increase objective achievements.

LIMITATIONS :Peer jealously & conflicts.Disregard safety regulationsCostly.Poor health.Quality

ESSENTIALS OF A GOOD INCENTIVE PLANAttainable standards Simplicity.Economical.Prompt payment.Health and welfare.Stability.Just and equitable.Attraction for workers.

TYPES OF WAGE

INCENTIVE PLANS…

INDIVIDUAL INCENTIVE SYSTEMS…TIME BASED SYSTEMS….

PRODUCTION BASED SYSTEMS…

HALSEY PLAN

ROWAN PLAN

EMERSON

PLAN

BEDEAUX PLAN

TAYLOR’S DIFFERENTI

AL PIECE RATE

SYSTEM

GANTT’S TASK AND

BONUS PLAN

A.HALSEY PLAN… FORMULA:T*R+[S-T/2]*RS=Standard time allowedT=Time takenR=Hourly rateB. ROWAN PLAN…FORMULA:T*R+[S-T/2]*T*RS=Standard time allowedT=Time takenR=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…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.

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…

PRIESTMAN’S PLAN

CO-PARTNERSHI

P

SCALON

PLANPROF

IT 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.

TYPES OF FRINGE BENEFITS

PAYMENT FOR TIME

NOT WORKED

EMPLOYEE

SECURITY

SAFETY AND

HEALTH

WORKMEN’S COMPENSATI

ON

VOLUNTARY ARRANGEMENS

WELFARE AND

RECREATIONAL

FACILITIES

HEALTH BENEFITS

OLD AGE AND RETIREMENT

BENEFITS

Thank you