Question

In: Operations Management

What are some advantages of offering an individual piece rate pay plan to the furniture builders...

What are some advantages of offering an individual piece rate pay plan to the furniture builders at Metropolitan Furniture?

What are some advantages of offering a team-based incentive pay plan?

Solutions

Expert Solution

A piece-rate pay system means that the laborer is paid per unit of creation. Regardless of whether the unit of creation is a clay pot or a piece of composing, an individual is paid by individual yield, regardless of to what extent it takes. Although at the outset working by piece-rate may appear to be easier, the piece rate pay system has advantages and disadvantages that you ought to consider. Along these lines, you can decide whether this is a system you're willing to work with.

Advantage-

1-Time Efficient

Paying a laborer by yield encourages the specialist to manage time in order to increase the yield. This also warrants less oversight, as the laborer is already incentive to work harder.

2-Production Efficient

At the point when paid per piece, laborers will in general create and adhere to the most effective means of creation. Laborers have a personal stake in achieving the company's goals in the most effective way conceivable, because they're achieving progressively both for the company and for themselves.

3-Cost Accountable

It's easier to calculate the expense per unit, because it's easier to factor in the expense of labor. Calculate the time spent creating the item, which is the labor, and then add materials and transportation, and you can see that it's easy to arrive at a transparent manufacturing cost.

Advantages of offering a team-based incentive pay plan-

1-Team-Building

At the point when representatives must work in tandem with each other, depending on each other's commitments for their compensation, a feeling of teamwork can rise. Representatives have the potential to feel more grounded and more viable in a team unit than they do operating on an individual basis. This can translate to greater staff solidarity in different aspects of the business, which has the potential to fortify the workforce and encourage company loyalty and life span.

2-Competition

Healthy rivalry can spike greater degrees of achievement when representatives are chipping away at team-based incentive pay ventures. This is especially evident in instances where earnings are partitioned among workers in a gathering according to efficiency. Care must be taken in this regard to guarantee equitable performance for equitable pay, or representatives may not give you full purchase in to the practice.

3-Positive Peer Pressure

At the point when a gathering of representatives is moving in the direction of an aggregate goal, chances increase that ambitious laborers will encourage greater degrees of participation from their less ambitious colleagues. This type of friend weight can be certain when failing to meet expectations staffers apply extra exertion in order to not let down their gathering individuals. This can have an added advantage of pushing lower-achieving workers to step up their game and operate at new levels.

4-Increased Earnings

Any time an entrepreneur bases pay on the performance levels of representatives, it creates a dynamic wherein the more workers produce, the more they earn. This principal applies to the entrepreneur from a similar perspective as well. While he may be compensating team endeavors at a more elevated level, the higher earnings also translate to increased benefits for the business, creating a success for everybody.


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