It is necessary to have a team work. It is required to reward not only the direct workers but also the indirect workers who assist the direct workers. It is difficult to measure the output of individual workers because the output depends upon the combined efforts of a group of workers. A group bonus is divided among the workers of the group in proportion to the basic wages earned by them. It creates team spirit which in turn leads to high output. It eliminates excessive waste of time because the members of the group divide the work among themselves according to their convenience keeping in view the interest of the group as a whole. It guarantees time wages to the members of a group. Workers are likely to maintain flow of production in a group. Hence, a group bonus plan is very useful in activities where a number of processes are involved and the completion of one process depends upon the completion of the previous process.
It greatly reduces the number of rates to be negotiated. It is easier to manage the scheme because members of the group take care of themselves. It is administratively simpler because less recording of labour times and production rate is required. The share of bonus of efficient workers may be the same as that of inefficient workers because all workers of the group get bonus in proportion to their normal time rate earnings. A group bonus scheme is less direct in approach than individual incentive schemes, so it may not provide the same incentive as individual incentive schemes provide. It may be difficult to obtain agreement on the proportions of the bonus which group members will receive. Hence, there may be a difficulty in the distribution of bonus among members of the group. The degree of skill required from the workers of the group should not vary widely. The number of the members of a group should not be very large. The production of a group should be independent of any other group.
A group bonus scheme can be successfully applied in the large automobile factories, iron and steel works, ship building yards, heavy engineering, mass production enterprises and also in other assembly type of production operations where individual performances tend to lose their identity and operations are performed on a group basis. Under this plan, a standard production is fixed for the entire factory for a particular period in consultation with workers. The actual production is compared with the standard production at the end of the period. If the actual production exceeds the standard production, all workers are paid bonus in proportion to the increase in output. Workers are assured time wages if actual output does not exceed the standard output. Workers try hard to produce more because they are to get bonus only when actual output is more than the standard output. The objective of this plan is to encourage cost reduction by foremen and workers. However, bonus is paid upon a reduction in labour cost alone.
Two fitters, a labourer and a boy, undertake a work on piece work basis for Rs 600. The time spent by each of them is 220 ordinary working hours and the rates of pay are for the two fitters 75 paise each per hour, for labourer 50 paise per hour and the boy 25 paise per hour. Ascertain the amount of piecework premium and show the amount of it which each worker will receive when it is divided proportionately to the wages paid and show in each case the percentage the premium bears to the wage payments at ordinary rates. Rs 450, of selling expenses Rs 300, and for carriage charges Rs 200 and give the total cost. To return the manufacturer 20 per cent on the total cost, at what price it must be sold, and what will be the profit if reckoned on selling price? How to Calculate Production Bonus under Group Incentive Scheme? Why is Rowan Plan better than the Halsey plan?
While it is possible to use performance appraisal for employee development and feedback purposes solely, many organizations wish to link the appraisal process to specific reward and incentive outcomes. Studies indicate that employees find the process of appraisal more satisfying and credible when it is linked to reward outcomes. The examples given below are based on a performance appraisal system with a five-point rating scale and seven performance factors. Because the underlying method is based on the ANPAS performance appraisal system, which uses seven performance factors and five-point Likert-type scales. This is the amount of money that the organization is prepared to allocate for bonus use. Next, an average performance appraisal rating is determined for each employee. If an employee scores higher than a pre-determined level, he or she is eligible for the bonus.