Piecework Plan and Merit Pay

Topics: Performance-related pay, Piece work, Motivation Pages: 9 (2689 words) Published: February 8, 2012
Programme Title:Management of Human Resource and the Practice of Management Batch No:ABMEM 0962B

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Deadline: 26-Dec-2009
Table of Content

No.| Topics Headings in Project| Pages|
1| The usefulness and limitations of Piecework plan and Merit Pay| Pg 3 – Pg 10| 2| Identify and explain 5 reasons as to why incentive plans fail| Pg 11 – Pg 13| 3| How are you going to implement the incentive plans?| Pg 14 – Pg 15|

Question 1
It was Frederick Taylor who advances the arguments for adopting financial incentives as a motivation tool. Critically examine the usefulness and limitations of the two following incentive plans: a) Piecework plans

b) Merit Pay

a) Piecework plans
Under the straight piecework plan, the employee is guaranteed a minimum hourly rate for meeting a pre-established standard output. For output above this standard, the employee earns a specified amount for each piece produced. Under differential piece rate plans, there are two rates. One rate is for the performance up to the standard. The other is used when the employee exceeds the standard. The latter rate is higher than the former. It is simply to encourage the employee to exceed the standard. Following stated two type of Piecework pay:

Straight piecework is a fixed sum is paid for each unit the worker produces under an established piece rate standard. An incentive may be paid for exceeding the piece rate standard. Standard hour plan is worker gets a premium equal to the percent by which his or her work performance exceeds the established standard (Dessler.G, 2005) Following are several benefits applying of piecework plans in organization or factories: Boost Productivity

Motivating employee’s more productivity and enhanced. This plan is suitable apply on certain field i.e.; farms crew and textile factories in order to raise output to meet customer orders or improving on time shipments. From theory of Scientific Management Frederick Winslow Taylor, workers are paid according to the number of items they produce in a set period of time- piece-rate pay. Workers are encouraged to work hard and maximize their productivity. (tutor2u, motivation theories) Opportunity Earn Higher Pay

Piecework plans is an opportunity for employees to earn more or above their hourly rate. Employers may obtain the most productive workers since piecework motivates employees to producing more in order to receive a higher wage. This also encourages employees to become as efficient as possible to produce more because time is precious for them to earn money. Equity, employees paid depend on how much they could produce. Suitable apply on individual piecework plan .Best way to avoid laziness and absent happen in the workplace. However, the followings are limitations faced by employers when applying piecework plan: Supervision Needed

The limitations of Piecework Plan are it requires constant administration as well as industrial engineers and industrial engineering technicians, supervisors to maintain the system. Decrease in the cost of waste, spoilage, rejects, and rework. As Frederick Winslow Taylor said, ‘workers do not naturally enjoy work and so need close supervision and control’. Quality vs. quantity

If the quality of the product suffers due to the fact of increasing quantity, then it is counter- productivity. Frequent errors, defective products due to employees rushing to produce or cut corners and quality suffer. Quality control is needed to avoid all of these problems occur frequently. Affect to employee’s health

Due to the fact of long working hours, it will affect the health of the employees as they would want more income means long hours working without sufficient rest given thus employer would make use of this ,becoming as an act of ill treatment. This abuse of labor gave piece work a negative connotation. For examples, crew workers were involved in multiple...
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