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Time-Keeping Systems Summary

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21 views3 pages

Time-Keeping Systems Summary

Uploaded by

tanjimalomturjo1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Systems of Remuneration on Result Basis

1. Straight Piece Rate

Under this system, the worker's earnings are based on the number of units produced, irrespective
of time.

Formula for Piece Rate:

Comparable Hourly Pay × Standard Time Required


Piece Rate =
60
​

Example: If the hourly rate is ₹2.40 and the time required is 70 minutes, the piece rate will be
₹2.80.
Individual Piece Work: Worker earns by multiplying the number of units produced by the piece
rate.

Group Piece Work: The group's total earnings are divided proportionally among workers based on
their time wages.

2. Taylor’s Differential Piece Rate (By F.W. Taylor)


Introduced by the father of scientific management, F.W. Taylor.
Two rates are fixed:
Below 100% Efficiency: Workers earn 83% of the time rate.
Above 100% Efficiency: Workers earn 125% of the time rate + 50% of time rate as an
incentive.
Formula for Efficiency:

Standard Time
%Efficiency = × 100
Actual Time Taken
​

3. Merrick Differential Piece Rate

A modification of Taylor’s system where penalties for inefficiency (<100%) are removed.
Differential rates:
Up to 83% Efficiency: Normal rate.
83% to 100% Efficiency: Normal rate + 10%.
Above 100% Efficiency: Normal rate + 30%.

4. Emerson Efficiency System

A guaranteed day wage system with bonuses for exceeding a set efficiency level (typically 67% or
above).
Bonus Calculation:
At 100% efficiency: Bonus is 20% of hourly rate.
Above 100% efficiency: Bonus increases by 1% for every 1% increase in efficiency.
Promotes incremental rewards for greater efficiency.

Premium Bonus Plans

These plans combine time wages and piece wages to motivate workers.

1. Halsey Scheme

A time-saving based scheme introduced by Mr. F. A. Halsey (U.S.A).

Workers receive guaranteed wages plus 50% of the time saved.


Formula:

Time Saved
Total Earnings = (Time Allowed × Hourly Rate) + ( × Hourly Rate)
2
​

Example: If time allowed is 7 hours, time taken is 6 hours, and the hourly rate is ₹3:
Normal wage = ₹21
Bonus = ₹3 × 0.5 × (7-6) = ₹1.50
Total = ₹22.50
Advantages:
Easy to calculate.
Rewards efficiency without penalizing slow workers.
Reduces overhead costs per unit.
Disadvantages:
Savings are shared between employer and employee, which some workers dislike.
Effort depends on workers and tools.

2. Rowan Scheme

Introduced by David Rowan, this scheme focuses on proportional rewards for time saved.
Workers receive wages for hours worked + bonus proportional to the time saved.
Formula:

Time Taken
Bonus = Time Saved × × Hourly Rate
Time Allowed
​

Example: If time allowed is 75 hours, time taken is 60 hours, and the hourly rate is ₹3:
Normal wage = ₹180
Bonus = ₹36
Total = ₹216
Advantages:
Safer for employers since excess time savings are capped.
Reduces labor costs and increases productivity.
Disadvantages:
Sharing savings discourages workers.
Depends on proper tools and materials for efficiency.

Comparison: Halsey vs. Rowan Schemes

Similarities:

1. Time rate is guaranteed under both schemes.


2. A standard time is set for completing the task.
3. Bonus is dependent on time saved.
4. Both schemes share time savings between employer and employee.
5. Encourage higher output and lower overhead costs.

Differences:

1. Bonus Proportion:
Halsey: Bonus = 50% of time saved.
Rowan: Bonus = Proportional to time saved relative to time taken.
2. Time Saved:
Halsey benefits workers if time saved is large.
Rowan benefits employers when time saved is small.
3. Limit on Speed:
Rowan limits excessive speed to reduce wastage and defects.
Halsey offers higher bonuses for greater time savings, which may lead to more defects.

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