Question

Differentiate between the wage incentive plans given by Halsey and Rowan. 

Answer 1

Bonus: Under Halsey plan, the bonus increases steadily with increase inefficiency. But in Rowan plan the bonus increases up to a certain point and starts declining thereafter. Rowan's plan provides a better bonus than Halsey's plan until the work is completed in half the standard time.

When the work is completed in exactly half the standard time, the bonus is the same under both the plans. When the work is completed in less than half the standard time, a bonus is greater under the Halsey plan.

Under Rowan's plan, less efficient workers may get the same bonus as a more efficient one. For example, if the standard time is 10 hours and the hourly rate of wage is ₹ 10, the bonus payable under the plan will be ₹ 24 when the work is completed in 6 hours. The same amount of bonus is payable to another worker who takes only 4 hours to complete it.

Earnings per hour: Under the Rowan plan when time saved is less than 50% of standard time, earnings per hour are higher whereas under the Halsey plan when time saved is more than 50% of standard time, earnings per hour is higher. At 50% time saved, earnings per hour are the same under both the plans.

Quality of output: The quality of work is not affected much under Rowan's plan as the bonus increases at a decreasing rate at higher levels of efficiency and the workers do not prefer to rush work.