Incentive Wage Plans - 2nd Part

Read Incentive wage plans - part 1st before reading its second part.

In second part of incentive wage plans, we will cover following :-

1. Taylor's Differential Piece Wage Plan

This plan was discovered by American wise man F.W. Taylor in 1880. In this system, we have to encourage to good workers and discourage to bad workers. Under this method, wages are given on the basis of work. There is no guarantee to pay wages on the basis of time. In this method, we calculate standard time on the basis of time and motion study. There is also different rates of wages. If a laborer will close the work before standard time, he will get reward of higher wage.

For example

A worker is paid on the basis of Taylor's differential piece rate plan. The standard production is 200 articles in a day. The piece rate are Rs. 4/-  for the workers who finish the work in standard time or in less time than standard time and Rs. 3/- for the worker who takes more than standard time. The worker produced 220, 200 and 180 articles respectively on the first, second and third day or week ending on 22nd Jan. 2010. Calculate the total earning of the worker for the above period.


Earning for 1st day = 220 X 4 = Rs. 880/-

Earning for 2nd day = 200 X 4 = Rs. 800 /-

Earning for 3rd day = 180 X 3 = Rs. 540/-

Total earning for the above period = 880 + 800 +540 = Rs. 2220

{ Note : Rs. 4/- is applicable as rate for the first and second day of week because workers finished the work in less equal time to standard time. It is Rs. 3/- per unit which is applicable for third day because the work was finished in more than the standard time}

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Education : Incentive Wage Plans - 2nd Part
Incentive Wage Plans - 2nd Part
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