B.Com Notes

What is Meaning of Incentive Wage Method | Methods of Wage Payment

Meaning of Incentive Wage Method
Meaning of Incentive Wage Method

Meaning of Incentive Wage Method

Both time rate and piece rate systems discussed above have their own merits and demerits. Incentive plans attempt to combine the good parts of both of the system.

Thus incentives plans envisage basic rate usually on time basis applicable to all workers and incentive rates to the more efficient among them as extra compensation for their meritorious performance in terms of time, costs and quality.

The incentive rates may take the form of bonus or premium. Bonus means the payment to workers of the entire benefit accruing from saving in costs, time improvement in quality etc.

Premium means the benefits accruing to the firm as the result of higher output or better quality will be shared equally or on some agreed basis between the management and the workers.

The main objective of incentive plan is to induce worker to produce more to earn a higher wage. Producing more in the same period of time should result in higher pay for the worker.

Because if greater number of units produced, it should also result in lower cost per unit for fixed factory cost and also labour cost.

ALSO READ- Incentive Plans For Wage Payment Workers | Advantages, Disadvantages

Methods of Wage Payment

Generally wages payments are done in two ways-

(a) according to time.

(b) according to work (piece).

On these two basis, many incentive wage systems have been developed in order to take advantages of both these systems. As such incentive system may be called as mixed form of the above two methods. In brief, method of wages payment can be divided into three parts.

1. Time Wage Rate Method.

2. Piece Wage Rate Method.

3. Incentive Wage Rate Methods.

Related Links


Disclaimerwww.efullform.in does not own this book, PDF Materials Images, neither created nor scanned. We just provide the Images and PDF links already available on the internet. If any way it violates the law or has any issues then kindly mail us; itsabhi356@gmail.com

About the author


Leave a Comment