B.Sc Notes

What is Collective Bonus Plan | Suitability, Advantages, Disadvantages

Collective Bonus Plan
Collective Bonus Plan

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:

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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.

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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.

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