MODULE 3

SYLLABUS:
Methods engineering: Analysis of work methods using different types of process chart and flow
diagrams- Critical examination- Micro motion study and therbligs- Principles of motion economy.
Work measurement-Performance rating.-Determination of allowances and standard time. Job
evaluation and merit rating - Objectives and principles of job evaluation--Wages and Incentives-
Primary wage systems- Wage incentive plans.

WORK STUDY:
• Work study is one of the most important management techniques which is employed to
improve the activities in the production.
• The main objective of work study is to assist the management in the optimum use of the
human and material resources.
• It has three aspects:
➢ More effective use of plant and equipment.
➢ More effective use of human effort.
➢ Evaluation of human work.
• Work study is simply the study of work. It is the analysis of work into smaller parts followed
by rearrangement of these parts to give the same effectiveness at lesser cost.
• It examines both the method and duration of the work involved in a process.
Importance/objectives of work study:

• It is a mean for raising productivity of an industry by re-organization of the work, involving

little or no capital expenditure at all. .
• It is used to determine the standards of performance.
• It results in better workplace layout, neat and clean working environment resulting in
minimum movement of workers and materials.
• It results in saving and efficient use of human and material resources by increasing output
and reducing scrap, rework etc.
• It eliminates unnecessary human movements.
• Results in improved safety.
• Reduction in fatigue and health hazard.
RELATIONSHIP BETWEEN METHOD STUDY AND WORK MEASUREMENT:

• Method Study: “Method study is the systematic recording and critical examination of existing
ways of doing work, as a means of developing and applying easier and more effective
methods and reducing costs”.
• Work Measurement: Work measurement is concerned with the determination of the
amount of time required for a qualified worker to carry out a specified job at a defined level
of performance.

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METHOD STUDY:

• Method study is the systematic recording and critical examination of existing and proposed
ways of doing work as a means of developing and applying easier and more effective methods
and reducing cost.
Objectives of Method Study:

• The improvement of processes and procedures.

• The improvement of factory, shop and work place layout and of the design of plant and
equipment.
• Economy in human effort and reduction of unnecessary fatigue.
• Improvement in the use of materials, machines and manpower.
• To find the best way of doing a job.
• To standardize the best method.
• Reduction of waste and scrap, improvement in quality.
• Greater job satisfaction, higher standards of safety and health.
Basic procedure for method study:
1. Select: the work to be studied.
2. Record: all the relevant facts of the present method is observed.
3. Examine: The purpose, place and sequence of every operation should be critically examined.
This will reveal defects in existing methods.
4. Develop: the most practical, economical and effective method considering all the
circumstances.
5. Define: the new method is defined.
6. Install: that method as standard practice.
7. Maintain: that standard practice by regular routine checks.

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RECORDING TECHNIQUES:
• The next step in the basic procedure, after selecting the work to be studied, is to record all
the facts relating to existing method.
• Purpose of recording can be summarised as follows:
➢ To enable the process to be clearly understood.
➢ To present the existing facts for analysis.
➢ To submit the proposals to the management in a form which can be easily understood.
➢ To guide supervisors and operators regarding detailed operating instructions.

• According to the nature of the job being studied and the purpose for which the record is
required, the following are the most generally used techniques:

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 ➢ Charts: Indicating process sequence.
1. Outline process chart.
2. Flow process chart.
3. Two - Handed process chart.
➢ Diagrams indicating movement and models:
1. Flow diagrams.
2. String diagrams.
PROCESS CHARTS:

• The construction and interpretation of process charts are simplified by the use of two or more
of the following symbols.
• These symbols divide the task selected into five functions and all activities can be so divided.

SYMBOL ACTIVITY DESCRIPTION

Usually the part, material, or product concerned is modified or
OPERATION changed during operation, e.g. cutting a bar on a power
hacksaw, filing, facing etc.
Inspection is an act of checking for correctness of the quantity
INSPECTION or quality of the items, e.g. gauging piston pin or checking the
hardness of a mild steel piece etc.
This indicates a movement of workers, materials, or equipment
TRANSPORT from place to place, e.g. m.s. bar being sent from stores to
machine shop.
DELAY Delay occurs when something stops the process and product
(Temporary wait for the next event. E.g. Power failure, machine breakdown
storage) etc.
It indicates when any object is intentionally retained in a state
or location and removal of the object requires proper
STORAGE
authorization. E.g. milling cutters lying in tool store, finished
goods ready for sell etc.

• In addition to the basic symbols discussed above, there are symbols for combined activities
also. The important event has the outer symbol.

SYMBOL ACTIVITY DESCRIPTION

OPERATION-CUM- Example - Articles are being painted as they are transported
TRANSPORTATION by the chain conveyor.

INSPECTION- Example - A powder milk tin is being weighed (inspection)

CUM-OPERATION as it is filled. Both the events occur simultaneously.

1. Outline process Chart:

• The outline process chart gives the overall picture of the process.
• It is a graphic representation of the points at which materials are introduced into a process
and of the sequence of all operations and inspections associated with the process.
• The general flow of the process is indicated by vertical lines, while horizontal lines indicate
the material being introduced.
• The chart does not show where work takes place or who performs it.

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• It is only concerned with operations and inspections, hence only two of the five symbols are
used in this type of chart.

• Flow line is continued down the line until the point where next component joins it.
• The symbol on the main flow line after the junction of the main and the other flow line is
assigned the next higher serial number.
• The brought-out parts are also shown in the operation process chart. The flow line of the
brought-out part terminates at the point the part enters the assembly. This procedure is
illustrated in the Fig. 41.4.

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2. Flow Process Chart:

• Flow process chart is defined as a graphic representation of all operations, inspections,

transportations, delays, and storages occurring during a process or procedure which includes
information necessary for analysis such as time required, quantity and distance moved etc.
• Types:

➢ Man type - It records what the worker does.

➢ Material type - It records what happens to the material.
➢ Equipment type - It records how the equipment is used.

• Flow process chart is an amplified form of operation process chart.

• All the detailed information regarding the process is to be recorded i.e. all the five symbols
are used to write down the details of the activity.
• This chart is very important for the analysis purpose because it gives a complete picture of
what is being done and helps the man to understand the facts and their relationship to one
another.
• Wherever the transportation symbol is used, the actual distance covered by man, material or
machine should be recorded.

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3. Two Hand Process Chart: (Left- and Right-Hand Process chart):
• After studying the operation process chart and flow process chart, it is the proper time to
investigate the specific operation in order to improve it.
• It is a motion study where the study is done to analyse the motions used by the worker in
performing an activity.
• The objective of this investigation is to eliminate or reduce the unwanted motions and to
arrange the remaining motions in a best sequence.
• The two-hand process chart is “a chart in which the activities of a worker’s hand are recorded,
in their relationship to one another.
• It is commonly used for short and repetitive operations.
• Procedure for preparing two-handed process chart:
1. Before start of recording, study the operation cycle few times.
2. Observe one hand at a time and record.
3. Record few symbols at a time.
4. Start observing and recording at a position which could be easily distinguished. The action
of picking up or grasping a fresh part at the beginning of a cycle of work is a good point at
which to start record.

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DIAGRAMS:

• Flow process chart only shows the sequence of various activities necessary for performing
the specified work. It does not show clearly the path of movement of men and materials from
one location to another.
• The path of movement (i.e. movement between two locations and the number of times a
movement is repeated) can be better visualized by flow diagrams, string diagrams or models.
• The flow diagram is used to supplement the flow process chart.
flow diagram:

• It is a drawing or diagram which is drawn to scale.

• It shows the relative production machinery, jobs, fixtures, etc., and marks the paths followed
by men and materials.
• The routes followed in transport shown by joining the symbols in sequence by a line which
represents as nearly as possible the path movement of the subject concerned.

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Steps in drawing a flow diagram:
1. Draw to scale the plan of the work area.
2. Mark the relative positions of machine tools, benches, stores, racks, inspection booths,
etc.
3. From the different observations, draw the actual movements (paths) of the material or
the worker on the diagram and indicate the direction of movement.
4. Each movement is serially numbered and indicated by an arrow for its direction.
5. Different colours are used to identify different types of movements e.g. worker with
empty trolley, worker with loaded trolley etc.

String diagram:

• String diagram is a scale layout drawing on which length of a string is used to record the extent
as well as the pattern of movement of a worker.
• String diagram is a model or scaled plan of the shop, in which every machine or equipment is
marked and a peg/pin is struck in the area representing the facility.
• It is especially valuable where journeys are irregular in nature.
• The main advantage of string diagram over flow diagram is that repetitive movements
between workstations are difficult to be traced on the flow diagram can conveniently shown
on string diagram.
• When there is too much of movement involved then, a flow pattern may become unreadable.
• The flow diagram makes use of pencils or pens to draw the path of the men or material
whereas the string makes use of threads to draw the same.

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MICROMOTION STUDY:
• Micromotion study technique is best suited for those operations which are short in cycle and
which are repeated thousands of times (such as the packing of sweets into boxes or food cans
into cartons).
• In such operations it is worthwhile to go into much greater details to determine where
movements and effort can be saved and to develop the best possible pattern of movement,
thus enabling the operator to perform the operations repeatedly with a minimum of effort
and fatigue.
• Such repetitive short cycle operations involve quick hand/limb motions which cannot be
accurately studied and timed using the two-handed process charts.
• Short cycle jobs need to be studied for microscopic motions (each micromotion consists of a
number of micromotions e.g. operation of picking up a bolt from a bin consists of three hand
motions namely reach for the bolt, grasp bolt and move hand back to assembly position).
• Such detailed analysis helps to develop the best possible pattern of motions thus enabling
the worker to perform operations repeatedly with minimum effort and fatigue.
• “Micromotion study is a set of techniques intended to divide human activity into groups of
movements or micromotions (therbligs) and the study of such movements helps to find for
an operator one best pattern of movements that consumes less time and requires less effort
(or fatigue) to accomplish the task”.
THERBLIGS:

• All the manual work consists of few fundamental hand motions which are performed over
and over again.
• To facilitate micromotion study, Mr. Gilbreth divided all the human movements into elements
according their purpose.
• These are called THERBLIG (Reverse of his name). There are 18 therbligs, as shown in the with
figure

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PRINCIPLES OF MOTION ECONOMY:

• A worker while performing a task makes use of number of motions or movements. The careful
examination of these motions may reveal that some of these motions:
➢ are unnecessary and can be eliminated.
➢ can be combined/modified by changing their sequence.
➢ can be simplified by effecting changes in the work bench layout.
➢ can be performed more efficiently by other members of the body.
• The study of an operation in terms of individual motions of a worker performing the operation
is known as motion analysis.
• A careful study was conducted on fatigue of factory operations on regular production work.
It showed that the amount of fatigue can be reduced to an extent by following the PRINCIPLES
OF MOTION ECONOMY.
• It emphasises how to use body members, how to locate the tools and equipments and how
to design the work place.
• If these rules are applied, obviously it will result in higher output of manual labour with
minimum fatigue.
• They may be grouped under three headings:
1. Use of the human body:
➢ The two hands should begin and complete their movements at the same time.
➢ The two hands should not be idle at the same time except during periods of rest.
➢ Smooth continuous motions of the hands are preferable to zigzag motions or straight-line
motions involving sudden and sharp changes in direction.
➢ free swinging movements are faster, easier and more accurate than restricted or
controlled movements.
➢ Rhythm is essential to the automatic performance or repetitive operations. The work
should be arranged to permit easy and natural rhythm whenever possible.
➢ Work should be arranged so that eye movements are confined to a comfortable area
without the need for frequent changes of focus.
2. Arrangement of the work place:
➢ Definite and fixed stations should be provided for all tools and materials to permit habit
formation.
➢ Tools and materials should be pre-positioned to reduce searching.
➢ Gravity feed bins and containers should be used to deliver the materials as close to the
point of use as possible.
➢ Tools, materials and controls should be located within the maximum working area and as
near to the worker as possible.
➢ Materials and tools should be arranged to permit the best sequence of motions.
➢ Provision should be made for adequate lighting and a chair of the type and height to
permit good posture should be provided.
➢ The colour of the work place should contrast with that of the work and thus reduce eye
fatigue.
3. Design of Tools and Equipments:
➢ The hand should be relieved of all work of holding the work piece where this can be done
by jigs and fixture or foot operated device.
➢ Two or more tools should be combined wherever possible.

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 ➢ Handles such as those of cranks and large screw drivers should be designed so as to permit
as much of the surface of hand as possible to come into contact with the handle. This is
especially necessary when considerable force has to be used on handle.
WORK MEASUREMENT:

• Work measurement (also called as time study) is the method of establishing the time required
by the qualified worker to carry out a specified job at a defined level of performance.
• Work measurement is concerned with investigating, reducing and subsequently eliminating
ineffective time.
Objectives of work measurement:
1. Determine the time required to do a job.
2. Cost reduction and cost control.
3. Identifying sub-standard workers.
4. Training of employees.
Advantages and scope of work measurement:
1. Work measurement determines normal time for a task and thereby establishes a
fundamental basis of a sound wage incentive scheme.
2. Work measurement provides the necessary data for efficient planning.
3. Work measurement provides a basis for standard costing.
4. Work measurement allows the most economic utilization of plant and machinery.
TECHNIQUES OF WORK MEASUREMENT:

Various techniques of work measurement are

1. Time study
2. Work sampling
3. Analytical estimating
4. Predetermined Motion and Time Study (PMTS)

1. Time study:
• Time study is a technique for determining the time necessary to carry out a given activity.
• Accurate measurement of time is necessary from limited number of observations.
Terms used in time study:
➢ Observed time: It is the time recorded by stopwatch during the observation of activity.
➢ Rating factor: During the time study, time study engineer carefully observes the
performance of the operator. This performance is compared with standard.
𝑜𝑏𝑠𝑒𝑟𝑣𝑒𝑑 𝑝𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒
𝑅𝑎𝑡𝑖𝑛𝑔 𝑓𝑎𝑐𝑡𝑜𝑟 =
𝑛𝑜𝑟𝑚𝑎𝑙 𝑝𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒
➢ Normal time or basic time: It is the calculated time of the activity of the operator
considering the rate of performance.
𝑁𝑜𝑟𝑚𝑎𝑙 𝑡𝑖𝑚𝑒 = 𝑂𝑏𝑠𝑒𝑟𝑣𝑒𝑑 𝑡𝑖𝑚𝑒 𝑋 𝑅𝑎𝑡𝑖𝑛𝑔 𝑓𝑎𝑐𝑡𝑜𝑟
➢ Allowances: The normal time for an operation does not contain any allowances for the
worker. It is impossible to work throughout the day even though the most practicable,

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 effective method has been developed. Some allowance must therefore be made for
recovery from fatigue and for relaxation. Allowances must also be made to enable the
worker to attend to his personal needs.
The important allowances are discussed below.
Relaxation Allowance (RA) - Relaxation allowances are calculated so as to allow the
worker to recover from fatigue.
Contingency allowance (CA) - The contingency allowance is the time allocated during
planning for unscheduled events.
➢ Standard time: Standard time may be defined as the, amount of time required to
complete a unit of work under existing working conditions. Thus, basic constituents of
standard time are observed time, performance rating to compensate for difference in
pace of working and various allowances. Thus,
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑡𝑖𝑚𝑒 = 𝑁𝑜𝑟𝑚𝑎𝑙 𝑡𝑖𝑚𝑒 + 𝑅𝐴 + 𝐶𝐴 + 𝐴𝑛𝑦 𝑜𝑡ℎ𝑒𝑟 𝑎𝑙𝑙𝑜𝑤𝑎𝑛𝑐𝑒
procedure for time study:
1. Define objective of the study.
2. Select operator to be studied if there are more than one operator doing the same task.
3. Record information about the standard method, operation, operator, product, equipment,
and conditions on the Time Study observation sheet.
4. Divide the operation into reasonably small elements, and record them on the Time Study
observation sheet.
5. Collect and record the data of required number of cycles by timing and rating the operator.
6. Calculate the representative watch time for each element of operation. Multiply it by the
rating factor to get normal time.
𝑁𝑜𝑟𝑚𝑎𝑙 𝑡𝑖𝑚𝑒 = 𝑂𝑏𝑠𝑒𝑟𝑣𝑒𝑑 𝑡𝑖𝑚𝑒 𝑥 𝑅𝑎𝑡𝑖𝑛𝑔 𝑓𝑎𝑐𝑡𝑜𝑟
7. Calculate the normal time for the whole operation by adding the normal time of its various
elements.
8. Determine allowances for fatigue and various delays.
9. Determine standard time of operation

2. Work sampling:
• It is a method of finding the percentage occurrence of a certain activity by statistical
sampling and random observations.
• Work sampling is used to estimate the proportion of workers' time that is devoted to
different elements of work activity.
• The sampling process should be completely unbiased and each part comprising the
population must have an equal chance of being drawn. This can be ensured with the help
of random sampling.
Advantages of work sampling
➢ Many operators or activities which are difficult or uneconomical to measure by time study
can readily be measured by work sampling.
➢ Two or more studies can be simultaneously made of several operators or machines by a
single study person.

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 ➢ It usually requires fewer man-hours to make a work sampling study than to make a
continuous time study. The cost may also be about a third of the cost of a continuous time
study.
➢ No stopwatch or other time measuring device is needed for work sampling studies.
➢ It usually requires less time to calculate the results of work sampling study.
Disadvantages of work sampling
➢ Work sampling is not economical for the study of a single operator or operation.
➢ The operator may change his work pattern when he sees the study person.

3. Analytical estimation:
• Analytical estimating is a work measurement technique in which the time required to
carry out elements of a job at a define level of performance is estimated partly.
• Analytical estimating is used to determine the time values for jobs having long and non-
repetitive operations.
• Analytical estimating finds its application in repair and maintenance work, tool rooms,
construction, job production, office routines, etc.
JOB EVALUATION:

• Job evaluation is the technique used to correct inequalities in wages and install a systematic
method of pricing of jobs.
• It is a systematic process of evaluating different jobs of an organisation.
• Jobs are studied or evaluated and numerical value or an approximate classification is assigned
to each job.
• The relative job values are thus converted into definite wage rates by assigning the money
rate of pay to each job according to a definite system or scale.
• Job evaluation deals with the job only and not with the individuals who perform these jobs.
• For evaluating the individuals another method known as merit rating is used.
OBJECTIVES OF JOB EVALUATION:

• Its main objective is to formulate an appropriate and uniform wage structure.

• Eliminates wage inequalities (reduce wage imbalance).
• Determines relative value of different jobs in an organisation and thereby establishes wage
differentials between them.
• Clarifies the responsibility and authority associated with the jobs.
• Provides a basis for recruitment, selection, promotion and transfer of employees.
• Identify need tor training of the employees so as to prepare them for future jobs.
• Eliminates cause of employees’ dissatisfaction and reduces conflicts in industrial relation (i.e.
improve employer-employee relations).
PRINCIPLES OF JOB EVALUATION

1. Rate the job and not the man: Job requirements are definite and fixed. The man selected for
training may have plus or minus points as regards the job, thus the payments should be made
accordingly.
2. Explainable elements: The elements selected should be as few as possible but should cover
the necessary requirements for every job.

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3. Uniformity of understanding: The success of the job is totally dependent upon the uniformity
of understanding.
4. The job rating plan must be easily understandable: So that the plan can be easily understood
by workers or supervisors.
5. Co-operation from employees: Foremen, supervisors and even workers should be asked to
participate in the rating plan.
6. Discussion of money values: Discussion on money values should be avoided as it may lead to
fighting and quarrels.
7. Discussion on the job rating plan: Employees must be allowed to discuss job rating plan.
8. Establishment of wages: Too many occupational wage structures should not be established.
METHODS OF JOB EVALUATION:

The various commonly used methods of job evaluation are:

I. Non-quantitative methods
a) Ranking method (grading method)
b) Classification method
II. Quantitative methods
a) Factor comparison method
b) The point rating method.

A. Ranking method:
• This is the easiest and simplest method of job evaluation.
• In this method the jobs are ranked from the most important one to the least important.
• Each departmental head arranges the jobs in their department in the order of
importance.
• While ranking, following points are considered:
➢ Amount of work involved.
➢ Supervision needed.
➢ Extent of responsibility required.
➢ Difficulties involved in the work.
➢ Knowledge and experience needed.
Advantages:
➢ This method is simple, consumes less time and requires fewer forms.
➢ It can be easily mastered and administrated.
➢ It is suitable for small organisations involving lesser number of jobs to be evaluated,
➢ It is economical.
Disadvantages:
➢ It is less accurate than other methods, because of judgement factors and also all
jobs do not possess the same factors.
➢ It lacks in actual information. It only shows higher or lower values but does not
show how much one job differs from others.
➢ It is not suitable for large organisations.

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 B. Classification method:
• In this method, jobs are classified or graded in groups or levels of equal skill, difficulty,
responsibility, importance and other requirements.
• It may be production job, a sales job or an office job, each job family can be broken
into a number of grades.
• For example, production jobs may be classified into five grades, namely grade 1 to
grade 5. Grade 1 involves simple tasks requiring less skill, precision and accuracy while
grade 5 involves skilled, precise and highly accurate work.
C. Factor comparison method:
• Under this method, instead of ranking complete jobs, each job is ranked according to
a series of factors.
• In this method detailed analysis of the jobs is carried out by employing following live
main factors:
➢ Skill
➢ Mental effort
➢ Physical effort
➢ Responsibilities
➢ Working conditions
• Wages are assigned to the job in comparison to its ranking on each job factor.
D. Point method:
• The point system a widely used method is based on dividing the jobs into a number
of factors which in turn are further subdivided into grades or degrees.
• Certain points (weightage) is assigned to each grade. (For example, effort is one of the
factors which may be subdivided in two grades—physical and mental).
• The points or weightage assigned to each factor will vary from industry to industry.
MERIT RATING

• Employees merit rating is also known as performance appraisal or performance evaluation.

• It is the assessment of performance of the worker and his utility to the industry. Whereas job
evaluation evaluates the job.
• Merit rating assesses the merit of the person doing the job.
• It determines the extent to which an employee meets the job requirements.
• As we inspect our equipments and machinery periodically to ensure that they are in order
and capable of performing intended function, similarly, employees in the organisation need
to be inspected periodically to ensure that they produce the desired results.
Difference between Job Evaluation and Merit Rating
1. Job evaluation evaluates the job, merit rating evaluates the performance of a person doing
the job.
2. Job evaluation determines suitable wage structure for the job while, merit rating decides the
reward an employee should get in addition to his wages depending upon his merit.
3. Job evaluation does not recognise individual performance or variation within the job. It
merely determines wage and salaries level for jobs. Merit rating on the other hand recognises
individual differences or variations within the job.

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Benefits and Objectives of Merit Rating
1. Merit rating is a good device to increase industrial productivity and to reduce hostility
between employers and employees.
2. It provides a sound basis in making decisions for promotion, transfer etc. 3. It assists in
taking decisions about incentives, increments to be given to the workers.
3. It provides the basis for counselling the individual employees by pointing out their strengths
and weaknesses.
4. It increases consciousness of employees and introduces competitive spirit in them.
5. It guides and aids employees in their self-improvement and makes possible a close follow-up
of their progress.
METHODS OF MERIT RATING:

1. Ranking method.
2. Paired comparison method.
3. Man to man comparison.
4. Check list plan.

1. Ranking Method:
• Ranking is the oldest, simplest and most conventional method.
• In this method the workers are arranged in rank from best or most satisfactory to worst
or least satisfactory.
• There is another way of ranking by classifying the jobs in a firm in terms of various level
of skill or responsibility and rank the workers accordingly.
• This method however does not indicate points of difference between two or more of
them or does not indicate specific strengths and weakness.
• This method is used in business organizations where there are few employees.
2. Paired Comparison Method:
• In this method each man is compared with every other man, one at a time.
• Comparison is done with one trait (i.e. ability to perform the job).
• For example, A’s performance is compared to that of B’s, and decision is made concerning
whose performance is better.
• Then A is compared to C, D and E in order. Next, B must be compared with all others;
individually.
• The same approach is used for other personnel.
• Once all the possible combinations are considered, points scored by each employee are
totaled and is ranked according to his aggregate score in relation to aggregate score of
each other employee.
• This method is not suitable where number of employees is large. This method also does
not indicate specific strengths and weaknesses.
3. Man to Man Comparison Plan:
• The plan was widely used in U.S.A. in rating military officers and hence sometimes is also
known as Army Rating scale.
• This is based on five basic characteristics:
➢ Physical qualities.
➢ Personal qualities.
➢ Intelligence.

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 ➢ General value to the service.
➢ Leadership.
• Thus, a person to person comparison of each person or officer was made and his position
determined Therefore this is known as Man to Man comparison method.
4. Check list plan:
• These are the lists made up of a series of questions or statements which concern the
importance of the employee’s performance on the job.

WAGES:
• The remuneration paid to the worker is called wage.
• Wages can also be defined as the remuneration paid under contract by an employer to an
employee for the work performed by him.
• Wages should be sufficient to satisfy the ordinary needs and necessities of the worker provide
him some comforts of life and help him in maintaining his standard of living.
Desirable characteristics of good wage/incentive system:
➢ It should guarantee an adequate minimum wage. It creates a feeling of security in the
workers.
➢ The wage system should be simple and easy to understand.
➢ It should not involve excessive clerical work and thereby increase the ultimate cost.
➢ Time and motion study should be the basis for correct work standards on which wages are
based.
➢ The wage system should be fair for both the employer and employee and should be
acceptable to both.
➢ It must reward the worker according to his efficiency and merit. The reward should be
generous.
➢ To meet changing economic conditions, it should have sufficient flexibility.
TYPES OF WAGE PLANS (METHODS OF WAGE PAYMENT):

1. Time rale system.

2. Piece rate system.
3. Combination of time rate and piece rate systems.

1. Time Rate System:

• In this system the wages are based on the time (number of hours for which the worker
works) and not on the number of units produced by the workers.
• Daily wages, Weekly wages, Monthly wages, or Hourly wages are the types which show
time duration for which payment is to he made.
Advantages:
➢ This method is simple, easy to understand and easy to make wage calculations.
➢ It assures minimum fixed income to the workers even though his efficiency is reduced
temporarily by sickness or accident.
➢ The certainty of income helps to maintain the interest of the workers in his work.
➢ This system also ensures a careful handling of expensive machines and tools.

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 Disadvantages:
➢ There is no inducement for the workers to increase their efficiency and skill. The
reason is that in this system wages are fixed according to hours of work without
considering the quantity and quality of the work done.
➢ Keen management and strict supervision is essential.

2. Piece Rate System:

• In this system the wages are based on the quantity of work completed satisfactorily by
the worker.
• A fixed rate per unit produced or operation completed is paid to the worker.
Advantages:
➢ This system provides incentive for the workers to work hard in order to increase their
earnings.
➢ It helps to increase productivity and reduces unit cost of production as the overhead
charges like rent, salaries, depreciations, etc. are distributed over large number of
units.
➢ The need for strict supervision is reduced.
➢ It leads to a greater efficiency, on the part of management because the workers insist
on faultless raw-materials and proper condition of machine, tools, etc.
Disadvantages:
➢ This system is not suitable in industries, in which it is not possible to ascertain the
amount of work performed by and individual worker.
➢ It does not guarantee a fixed minimum wage to a worker and creates a sense of
anxiety and uncertainly in his mind.
➢ A temptation to earn high wages through greater output may lead to excessive speed
and strain on the workers. This may increase the number of accidents in the factory.
➢ In order to increase the output the workers may neglect the quality of output and
handle the costly tools, machines etc. carelessly.

3. Combination of piece rate and time rate system:

• Under this system minimum weekly wages are fixed for each worker, which shall be paid
to him irrespective of this output during the week, provided he has worked for the full
working hours required in a week.
• The wages for the period of his absence are deducted from the total amount of his wages.
• A job card of each worker is maintained, which clearly shows each piece of job completed
by the worker during a week.
• Piece work rate of each job is fixed in advance. If the piece rate wages earned by the
worker are in excess than the time wages the balance is paid to the worker.

INCENTIVES:
• Incentive is an inducement or reward given to the worker for his efficiency and hard work.
• In this system the worker gets a guaranteed minimum wage plus some extra payment or
bonus for extra work done over and above the standard work.
• Incentive motivates and encourages the worker to produce more and better.

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WAGE INCENTIVE PLANS:

1. Straight piece-rate system.

2. Taylor’s differential piece rate system.
3. Gantt task and bonus system.
4. Halsey incentive plan.
5. The Rowan system.
6. The Bedaux point system.

1. Straight piece-rate system:

• It is applied for simple manual operations like producing number of similar articles,
loading, unloading, etc. by individual efforts.
• In straight piece rate system, a piece rate for the completion of the job is fixed. If a worker
produces more acceptable jobs in a prescribed time limit he gets extra money.

2. Taylor’s Differential Piece-Rate System:

• This system provides for two-piece rates.
• The workers who produce more than the standard units are paid at a higher piece rate,
and those who produce less than the standard output are paid at low piece rate.
• The scheme thus rewards efficient workers and penalizes sluggish workers.

3. Gantt Task and Bonus System:

• It is a modification of Taylor’s differential piece rate system.
• The wages are calculated on hourly basis rather than on piece rate basis.
• Guaranteed time wages are paid for below standard performance
• Bonus is paid to the workers to achieve standard output which is a powerful incentive
• Higher piece rate is paid at higher level of performance (above standard performance).
• The standard time based on scientific work measurement is specified for each job.

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4. Halsey Incentive Plan:
• In this system a minimum wage is guaranteed to the workers.
• A standard time is fixed for the performance of each job.
• If a worker completes his job before the standard time, he gets guaranteed wage plus
incentive bonus at fixed percentage of earnings for the time saved.
• 𝑤𝑎𝑔𝑒 𝑜𝑓 𝑤𝑜𝑟𝑘𝑒𝑟 = 𝑛𝑜𝑟𝑚𝑎𝑙 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 + 𝑖𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒
𝑆−𝑇
• 𝑤𝑎𝑔𝑒 = (𝑅 × 𝑇) + [ ]×𝑅
2
R = hourly wage rate
S = standard time
T = actual time to complete the job

5. The Rowan System:

• The plan provides each workman guaranteed minimum wage plus incentive bonus for
certain portion of the time saved.
• In this scheme the proportion of the time payable for incentive being the ratio of actual
time taken to the standard time.
𝑆−𝑇
• 𝑤𝑎𝑔𝑒 = (𝑅 × 𝑇) + [ ]×𝑅×𝑇
2

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