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Chapter 9
Wage Components Pages 269 -270
Know what these mean
Base pay
Across the board
Cost-of-living
Merit pay
Lump-sum bonus
Individual incentive
Chapter 9 cont
3 Cs
Complexity
Control
Communication
Gain-Sharing Plans
Scanlon Plan
Rucker Plan
Improshare
Scanlon Plan
A group cost savings plan designed
to lower labor costs without lowering
the level of the firms activity.
Incentives are derived as a function
of the ratio between labor costs and
sales value of production(SVOP).
SVOP includes sales revenue and
value of goods in inventory
Rucker Plan
A group cost savings plan in which cost
reductions due to employee efforts are
shared with the employees. It involves a
more complex formula than a Scanlon
plan for determining employee incentive
bonuses.
A ratio is calculated that expresses the
value of production required for each
dollar of the total wage bill.
Implementing Scanlon/Rucker
Plans
Two major components
Productivity norm
Effective worker committees
Key elements to success
Strong management interest and
participation in program development
Belief workers should play a vital role in
the decision making process.
Similarities and Differences between
Scanlon and Rucker Plans
Both differ from individual incentive
plans by their focus.
Individual incentive plans focus
primarily on wage incentives to motivate
performance through increased effort
Both plans focus more on organizational
behavior variables as increased output
is a function of group efforts.
Similarities and Differences
between Scanlon and Rucker Plans
2 differences between the plans
Rucker ties incentives to a variety of
savings not just labor in the Scanlon
plan.
This difference give the Rucker plan
more flexibility which makes it easier to
link to individual incentive plans.
Improshare
IMproved PROductvity through SHARing
Gainsharing plan standard time to
produce an acceptable level of
outcome is identified.