Top 12 Essential Characteristics of a Good Incentive Plan

The twelve essential characteristics of a good incentive plan are as follows: 1. Simple to Understand 2. Just and Equitable 3. Attraction for Workers 4. Attainable Standards 5. Conducive to Health 6. Willingness of Workers 7. Clarity of Objectives 8. Incentive for Quantity and Quality 9. Standardization 10. Worker’s Incentive Earnings 11. Intimation of Efficiency 12. Right to Change Standards.

1. Simple to Understand:

The plan must be simple, easy to understand and to operate. It should involve least clerical work. The workers should be able to know the extra payments to be given to them. If the method of determining wages involves difficult calculations, then workers may find difficulty in calculating their wages. In spite of correct wages, there may be suspicion in the minds of workers about wages paid to them.

2. Just and Equitable:

Just and equitable system will be successful. A worker should be awarded for the work done by him. This does not mean that there should be undue load on the employers but wages paid must be commensurate with the efforts of workers.

3. Attraction for Workers:

Incentive payments should be sufficient to attract workers for improving their performance. If the incentive is small then workers will not fell tempted towards it. If person is getting Rs. 1800 per month as wages and is offered Rs. 450 more for raising his output, this will not be a good incentive for him. On the other hand, if he is offered Rs.200 to Rs. 300 as extra wages then he will feel tempted to earn. So incentive should be large enough, so that workers are tempted to earn it.

4. Attainable Standards:

The standards fixed under incentive plans be attainable with some extra efforts. If the standards are such that these are not attainable even with extra effort, then workers will feel discouraged. They may not even try to achieve them. The standards should be such, which may be achieved by average workers also. A standard which may be achieved only by few workers will not make plan ideal.

5. Conducive to Health:

A scheme should not tempt workers to overstrain them. When an incentive plan is such where workers are required to work for long hours or expected to work at much faster speed, then their health maybe adversely affected. There may be a calling on the maximum earnings by the workers in a week or month so that they do not overstrain themselves for longer periods.

6. Willingness of Workers:

The scheme should have willing support of workers. Before introducing an incentive scheme, it should be discussed with workers and their viewpoints should be incorporated as for as possible in the welfare scheme.

7. Clarity of Objectives:

Management should be clear about the goals to be achieved from the incentive schemes, It should be properly communicated to the workers also. The aim of such schemes may be to raise output, improve quality of products, etc. When workers are not clear about the aims of such schemes, then they will not be able to work for their achievement. So, objective of incentive scheme should be decided and made clear to all the concerned persons.

8. Incentive for Quantity and Quality:

The scheme should provide incentive for both quality and quantity of production. It should preferably be based on Time Study basis.

9. Standardization:

It should provide basis for all incentive schemes. All parameters like methods of working, input materials, work place and working conditions should be standardized.

10. Worker’s Incentive Earnings:

Workers should not suffer in his earnings for reasons like improper tooling or faulty materials, which are beyond his control. There should be no limit put on a workers incentive earning.

11. Intimation of Efficiency:

Workers Employees should be intimated of their past efficiency immediately. The information may go with their pay slip on which his basic and incentive earnings should be indicated separately.

12. Right to Change Standards:

Management must have the right to change standards when new methods and equipment are introduced in the working system. There should be no compromise on standards being maintained by the organization.

Submitted by : Dr. Diego, Category : Wages, Tag : Wages