7/30/2019 Group Bonus Plans

1/1

Group Bonus Plans: The premium bonus plans aims at creating the basis by which wage & bonus payable to individualworker is calculated. Thus, where the performance of an individual worker can be measured, the premium bonus scheme isapplicable. However, there are situations where instead of an individual worker, the performance of a group of workers, isdesired to be measured by, or only measurable. The situations are as below:

(a) When the measurement of the performance of the group as a whole can be done although the measurement of theperformance of individual worker is not possible.

(b)When, for the purpose of creating collective spirit of work amongst the workers, the performance of a group as a whole,instead of individual performances, is desired to be measured.

(c) A group of persons of different skills is required for the execution of the work due to its nature.

The group bonus schemes are to be introduced in the above situations.

Advantagesof the group bonus scheme are that it is capable of achieving: (1) team spirit development, (2) increase ofoutput, (3) Wastage minimization etc, (4) better quality of work, (5) automatic training (i.e. a helper may learn the workcontinuously so that ultimately he can become the master in the work) etc.

The disadvantagesof group bonus schemes are:

(a) The bonus which is earned by the group only due to more efficient workers is shared by all, irrespective of the

comparative efficiency of the workers in a group.

(b) Unless, there is a clear definition of the sphere of activities of each in the group, too many cooks may spoil the broth.

(c) Amongst the members of the group, responsibility evasion often becomes a chronic disease.

(d) The amount of bonus fixation & ascertainment of the basis of its distribution amongst the members is difficult.

To the entire factory, the group bonus scheme may be extended.

The important group bonus schemes are:

(a) Priestmans Production Bonus Scheme: A standard performance in terms of output or point is fixed by thisscheme. The workers as a whole, becomes entitled to bonus, if by producing output above the standard output , or bysecuring points more than the standard points, they can be account for better performance. On the basis of the ratio of

excess performance to standard performance, bonus is paid according to this scheme. Obviously, time wage is guaranteedunder this scheme. Thus, where there is mass production of standard articles with continuous flow of work, this scheme canbe extended to the entire factory.

(b) Rucker Plan:Under this plan, added value is defined as the change in market value due to the alteration in the form,location & availability of product or service, excluding the cost of bought in materials or services. The ascertainment of theratio of earnings & added value is done. Wage is proportionately increased due to any reduction in this ratio. For successfulimplementation, constant negotiation between employers & employees is required by the scheme. Rucker plan is known asshare of production plan.

(c )Scanion Plan:This is similar to Rucker plan, instead of the ratio between earnings & added value as considered in caseof Rucker plan, the ratio between earnings & selling price of production is taken as the basis in case of Scanlon plan.

(d) Towne Gain Sharing Plan:Standard cost of labour is set under this plan. In addition to the wages earned, theworkers become qualified to receive bonus for any reduction in the labour cost as compared to the standard labour cost.Bonus is equal to 50% of the savings in labour cost. On pro rata basis, the workers are paid bonus. Under this scheme, thesupervisory staff may also be entitled to bonus.