Meaning of Collective Bonus Plan
In the schemes discussed so far, the bonus to be paid has been calculated on the basis of individual worker’s performance. But there are certain jobs which are required to be done collectively by a group of workers.
In continuous production for example, work flows in a sequence or in assembly work for televisions, radios, scooters, etc. a team of workers is engaged on various operations. As such, it becomes necessary to introduce bonus schemes for collective efficiency of the group as a whole the intention is to create a collective interest in the work.
The total bonus determined is distributed among the members of the group on an equitable basis. The following bases-of distribution are commonly used:
1. Equal distribution, if skill and grade of workers in the group is uniform.
2. On the basis of time wages of each worker.
3. In proportion to the time rate of each worker, where each worker has devoted equal time.
4. In a fixed ratio determined in advance on the basis of merit rating.
Suitability of Collective Bonus Plan
Collective bonus schemes may be usefully employed in the following circumstances:
1. Where it is not possible to measure the performance of each individual worker.
2. Where the workers constituting a collective possess the same or equal skill and efficiency.
3. Where the number of workers constituting a group is not very large.
4. Where production is dependent on the collective effort of a group of workers as a whole.
Advantages of Collective Bonus Plan
The main advantages of collective bonus schemes are as follows:
1. It encourages co-operation and team work among the workers.
2. It reduces absenteeism because an absent member weakens the group and most of the workers do not like to let down their team.
3. The calculation of wages requires less clerical work as it involves recording of the output of the group and not individual workers.
4. Supervision work is reduced because less efficient workers are taken care of by the efficient ones.
5. Indirect workers can also be include in the scheme by allocating such workers to the groups.
Disadvantages of Collective Bonus Plan
The main disadvantages of this system are:
1. Collective bonus scheme is unfair to efficient and hard working workers of the group because an efficient worker is penalized for inefficiency other workers in the group.
2. There may be difficulties regarding fixing the amount of bonus the basis of its distribution among workers in the group.
3. There may be some discontentment when workers in the group are of widely varying skills and efficiencies.
- What is meaning of Classification of Cost & elements of Cost | rules of Cost Accounting Standard
- 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
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