1. INCENTIVE SCHEMES FOR DIRECT & INDIRECT WORKERS
PRESENTED BY:
SWATI GOYAL(33)
TUSHAR GAURAV(34)

2. INCENTIVE SCHEMES
MEANING:
Incentive is the stimulation of effort & effectiveness by offering monetary inducement or extra facilities. It is a method of remuneration of labour so as to encourage them to do their best. It may be monetary or non-monetary.
A good incentive plan should have the following characteristics:
It should be simple & easy to understand.
Operating cost of the system should be low.
It should permit less supervision.
The time lag between effort & reward should be minimum.
It should be fair to the employees & employer.
The standard set should be attainable.

3. CONTINUED… Performance above standard should be well rewarded.
It should be flexible.
The premium should be large enough to induce workers to work hard.
All workers should be given equal opportunity to earn.
It should facilitate budgetary control & standard cost systems.
Inspection should be good
Good working conditions must be available.
System should be introduced on a permanent basis & should not be ambiguous.
No rate cutting should be permitted & an individual’s earning should not be curtailed.
Their should be uniformity of reward for same amount of effort.
Indirect workers should also be included.

4. ADVANTAGES OF INCENTIVE SCHEMES
Less supervision is required.
The employees morale is high because they earn more.
There is increased productivity.
Increased production reduces cost.
Labour cost can be estimated.
It is possible to set standards for labour with accuracy.
There is maximum utilization of resources.
A task is done in the most economical manner which reduces labour cost.

5. DISADVANTAGES OF INCENTIVE SCHEMES
If rates are not uniform for same type of jobs, it causes discontent.
Quality may deteriorate & may be sacrificed in order to increase quantity.
It involves more calculations.
The workers may not adhere to the safety precautions in order to increase production. Hence accidents may occur.
The workers’ health may be affected due to overstrain.
There may be apprehensions regarding rate cutting.
Inefficient workers may envy the efficient ones which may cause unrest.
Unskilled workers sometimes earn more than skilled workers if the latter have to work on time basis.

6. CLASSIFICATION OF INCENTIVE SCHEMES
Incentive schemes can be classified as:
DIRECT WORKERS
DIFFERENTIAL
PIECE
RATE
PREMIUM
BONUS
SCHEMES
GROUP
BONUS
PLANS
INDIRECT WORKERS
BONUS
SCHEMES

7. CLASSIFICATION OF INCENTIVE SCHEMES.....CONTINUED......
MONETARY
SCHEMES
NON-MONETARY
SCHEMES
DIRECT
INDIRECT
PROFIT
SHARING
CO-PATENERSHIP
DIFFERENTIAL
PIECE
RATE
PREMIUM
BONUS
SCHEMES
GROUP
BONUS
PLANS
BONUS
SCHEMES
FOR
INDIRECT
WORKERS

8. BONUS SCHEME FOR INDIRECT WORKERS
Production cannot be increased by giving incentives to direct workers hence indirect workers are equally important.
It is difficult to introduce an incentive scheme for indirect workers because standards cannot be set easily, efficiency is difficult to measure & actual output can’t be determined in relation to set standards.
VARIOUS WAYS:
Indirect workers can be associated with direct workers for eg: Supervisors, Material Handling Workers etc. & in this case bonus can be linked to output of direct workers .i.e. % of average bonus earned by direct workers.
Indirect workers provide some general services, eg: Canteen staff, Cleaners etc. & their bonus can be based on output of department, output of entire organisation, merit rating, job evaluation, % of bonus for direct workers or high time-rates.

9. CONTINUED.....
Sometimes, bonus of indirect workers can be related to total production of dept. of cost centre. In case of higher levels of production, higher rate of bonus are applicable.
POINTS TO BE CONSIDER WHILE INTRODUCING AN INCENTIVE SCHEME:
It should be able to achieve all round efficiency.
It should relate rewards to efforts.
The bonus should be payable at some regular intervals.
It should be introduced for a certain period.

10. INDIRECT MONETARY INCENTIVE SCHEMES
PROFIT SHARING:
“An agreement freely entered into, by which receives a share, fixed in advance, of the profits.”
-HENRY R. SEAGAR
The workers get a share in the profit in a certain agreed % which is often governed by Payment of Bonus Act, in addition to normal wages.
It leads to low labour turnover, high morale, better employer-employee relationship, attracting quality workers etc.
CO-PATNERSHIP:
It is the profit given in form of shares to the workers.
Though employees get part of profits, these shares may or may not carry the voting rights, may deal freely or a few restrictions may be placed on them.