Question

3) Suppose that you work for a firm that produces a particular kind of widget. In the past, assembly-line workers were compensated according to a piece rate scheme in which they were paid according to the number of pieces that moved through their station in a shift. Unfortunately, under this scheme, the costs of reworking poorly assembled pieces increased considerably. In a meeting, a colleague proposes changing to a scheme in which every worker on a line is paid according to how many pieces make it through the line without requiring rework. a) What kind of incentive pay plan does this new plan most closely resemble and why? b) What potential issues can you identify with this new plan? Explain.

Answer 1

a). Here the colleague from the company came and suggested a method where the employee/ worker working for company will get paid according to through the line piece of production .

Here to cut the rework of workers ,“ Financial Incentive Payment Plan ” is followed by company which resembles mostly to the decision of colleague in meeting .

As worker is working properly through the line production which is saving time and helping in cutting costs of production and each worker is getting paid for each proper piece of product produced .

b). Worker being rewarded is ok but Financial Incentive Payment Plan have some issues with it too ..,

1. Incentive plan may lead to dispute among workers since some will earn more than others .

2. Hunger for money will make workers do overwork ,which will affect their health .

3. For enhanced incentives they may sacrifice quality.

4. Increase in malpractices by workers .

5. False records of production will lead to corruption .