A presentation on “Incentives For Indirect Workers”

Compiled by:-Nitin SrivastavaPallavi PrakashPankaj RaoPoonam Tanwar

Contents:

Sr.no Topic Slide no.

1 Incentives For Indirect Workers 3-5

2 Incentive Schemes In Indian Industries

6-8

3 Installing An Incentive Scheme 9-12

4 References 13

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INCENTIVES FOR INDIRECT WORKERS Indirect workers such as crane operators, helpers, charge

hands, canteen staff, security staff, employees in purchasing, sales and accounts, and maintenance staff also deserve incentives at par with direct workers.

Incentives should be paid to such workers either on the ground that they contribute to the increased production which the direct workers may achieve or on the ground that there work has increased because of increased production , or both.

Such payments are desirable to avoid dissatisfaction and dissension among the workers in a plant, or even strikes, which may result if indirect workers are paid at time-rates while direct workers receive substantial bonus.

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The payment of bonus to indirect workers poses a serious problem because the output of many of them cannot be accurately measured.

For example, it is extremely difficult to measure the output of maintenance staff, security personnel, or canteen employees, through it is possible to assess the performance of inspectors, sweepers and packers.

But whether the output of indirect staff can be measured or not, a single system of bonus payment is made applicable to all of them. In some cases, the bonus is calculated according to some agreed percentage on the output of the plant or of a department.

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In others, the bonus is a specified percentage of the incentives of all or some of the direct workers.

Many managements, however, prefer to apply a merit-rating system to indirect workers, which rewards these workers for other qualities, in addition to their output.

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INCENTIVE SCHEMES IN INDIAN INDUSTRIES

Introduced in 1946, incentive payments have become highly popular in our industries. They are as common as monthly wages and salaries.

But the schemes in operation defy any generalization because no two plants follow an identical scheme.

The schemes differ from industry to industry and from plant to plant within an industry. Some of the incentive schemes described by the ILO are followed here, but not in there original form. They have been modified to suit the local requirements.

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FEATURES OF INCENTIVE PAYMENTS

Though incentives are as old as industries themselves, it was only in 1946 that they were introduced in our country. Even to this day, the incentive schemes are in there infancy.

In most industrial establishments, the introduction of incentive schemes has not been preceded by work studies, consultations with workers’ representatives and rationalization of wage structure through job evaluation.

Incentive schemes differ from industry to industry and plant to plant within an industry.

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Most incentive schemes in operation fall under one or the other of the four classes mentioned by the ILO. But the schemes are fine tuned to suit the requirements of the organization.

The schemes in public sector plants have an extremely varied coverage, some applying only to day-rated employees while others are being made applicable right upto the top management.

Inflation has reduced the motivational effect of incentives. Hence, incentives have to be substantial if workers are to be motivated for higher efficiency and greater output.

In many cases, incentives seems to have achieved their objectives, that is increased productivity and enhanced earnings.

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INSTALLING AN INCENTIVE SCHEME

Installing a scheme of payment by results must proceed on the following lines:

1-Define the objectives of the payment system and if necessary, challenge the assumptions held about the purpose of the system and how it should operate.

2-Collect facts about the exiting system- the pay structure, the types of payment schemes in use, the number of people paid under each arrangement, the levels of earnings in different occupations and the make-up of earnings ,including overtime payment.

3-Analyze the circumstances in which the payment system operates.9

4-Compare the existing or proposed arrangement against the criteria for evaluating systems listed above.

5-Analyze the effectiveness of the pay structure and payment systems by:

(i)Comparing the results achieved with the objectives of the system under such headings as ability to attract and retain staff, effect of productivity, effect on management-employee relationships.

(ii)Identifying particular problem areas where the system is producing anomalies in pay or earnings between occupations or units, where the requirements of the equal-pay legislation are not met or where rates of pay are not competitive with local going rates.

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6-Consider conducting an attitude survey to obtain the view of workers, rate fixers and supervisors about the present system and the changes need to be made.

7-Consult as required with unions and employees on the present arrangements and what needs to be done about them.

8-Conduct pay surveys as required to establish local market rates.

9-Conduct job evaluation studies as required in consultation with unions to establish correct relativities and to provide the basic data for designing a logical pay structure.

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10-Develop pilot tests and install any revised or new individual, group or measured day-work payment systems that may be required, in consultation with unions.

11-Revise the pay structure as necessary in the light of the actions taken in step 8 and 10 and in consultation with the unions or employee representatives. In a unionised concern. revisions in the pay structure would, of course, have to be negotiated with the unions.

12-Ensure that information is available which will enable the effectiveness of a revised pay system or structure to be monitored.

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Refernces:

• http://books.google.co.in/books• A text book on Human Resource Management, TMH

by Ashwatthapa.

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