Plant Wide Incentive

Posted in Human Resource Terms, Total Reads: 394
Advertisements

Definition: Plant Wide Incentive

Plant-wide incentives can be understood as the gain sharing program as these include distribution of a portion of the company’s profit or the cost savings to its workers, often in form of the lump sum amount. This usually happens at the manufacturing plants which can be of any type. Incentives often come from the profits gained by the efforts of the workers of the manufacturing plant.


Incentives are distributed to appreciate and motivate the workers of the plant for keeping up their good work. Incentives are also distributed among the workers, as a gesture to show that the organization values their hard working employees. The plant-wide incentive plan can be applied to the groups as well as to individuals. There are different methods of incentive distribution, the most common method of incentive distribution is equal sharing of the surplus. In the plant-wide setup, group incentive plan is rarely used as in the plant-wide setup the premium is distributed as per the output of the entire factory. Sometimes Plant-wide incentive schemes cover only the production workers and in some other cases clerical staffs and even auxiliary workers share the increased earnings.

Conditions to be considered for the plant-wide incentives plan:-

1. Technology

2. Size of the firm

3. Corporate culture

4. Historical performance

5. Stability of the product market


Three major types of Plant-wide incentives:-

1. Scanlon Plan- This type of plan rewards labor savings, most appropriate for the organization that has high labor content.

2. Rucker Plan- This plan is useful for the companies that want to improve other elements such as energy consumption or scrap reduction in addition to labor.

3. Improshare- This plan is the easiest of the profit sharing plans to install and understand.

 

ADVANTAGES:-

1. Increase in the level of cooperation.

2. Improved quality.

3. Decrease in the measurement difficulties.

4. Eliciting active employee input.


DISADVANTAGES:-

1. Results in the protection of low performers.

2. Management-labor conflict.

 

Advertisements



Looking for Similar Definitions & Concepts, Search Business Concepts