Incentive Plans for Indirect Workers
Indirect workers are as much essential for production as direct workers and as such full increase in production can not be obtained without the full co-operation of the indirect workers.
Therefore, incentive may be introduced for indirect workers either to achieve the efficiency of the services they provide to direct workers or to induce foremen or supervisors to increase departmental efficiency and thus, reduce costs.
Also payment of bonus to indirect workers, when it is being paid to direct workers will prevent labour unrest.
Reasons for paying Incentives to Indirect Workers-
1. To reduce the cost of operating various departments by means of increasing their efficiency.
2. To avoid discrimination between direct and indirect workers.
3. To create team spirit and co-operative attitude.
4. To eliminate labour unrest and dissatisfaction among employees and reduction in labour turnover.
5. To encourage efficient indirect workers by rewarding them.
6. To enable them to improve their skill so that losses and wastages arising out of materials can be avoided.
7. To provide better service by indirect employees to direct employees.
Bases of Payment of Incentives
The indirect workers may be paid a bonus on any one of the following bases:
1. Where indirect workers serve a group of direct workers, they may be paid a bonus on the basis of performance of the group of direct workers whom they serve.
2. When indirect workers provide general services, bonus may be the basis of output of whole factory.
3. On the basis of job evaluation and merit rating of indirect workers.
4. On some arbitrary basis, like enhanced day rate so as to include an element of bonus in the rate itself.
- What is Installation of a Costing System | Conditions and Factors
- What are the practical difficulties in installing cost accounting
- What is technique of Costing | Various techniques of Costing
- What is Material or Inventory Control | Techniques of Materials Control
- What is FIFO Method | advantages and disadvantages
- What is LIFO method | Advantages and Disadvantages
- What is Periodical or Annual Inventory Control System | Limitations
- Methods of Pricing Material Issues | Cost Methods
- What is Cost of Labour Turnover | Causes, Effects Classification
- What is meant by idle time | Definition, Causes, Control
- What is meaning of overtime work | Reason, Disadvantages
- HIFO method of inventory valuation |Advantages, Disadvantages
- What is two Bin System | Meaning of Bin Card and Specimen
- What is Meaning of NIFO Method | Advantages, Disadvantages
- What is Market Price Method or Replacement Price Method | Advantages, Disadvantages
- What is average cost method of Inventory valuation | Advantages and Disadvantages
- What is Meaning of Weighted Average Price Method | Advantages and Disadvantages
- Meaning of Material Losses | Types and Treatment
- What is Difference Between Waste and Scrap
- What is Meaning of Obsolete Material |Causes, Treatment and Losses
- What are Methods of Labour Remuneration | Advantages, Disadvantages
- What is Meaning of Piece Wage Rate Method | Advantages Disadvantages
- What is Meaning of Remuneration
- What is Collective Bonus Plan | Suitability, Advantages, Disadvantages
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