Earning at risk plan

Earnings-at-risk (EAR) incentive plans are designed to enhance performance, in part, by creating base
wage dissatisfaction that, in turn, triggers greater effort directed toward performance behaviors
rewarded with incentive pay.

Incentive
Type of reward that motivates employee in work place it can be monetary or non monetary.

Critical Pay Survey

Critical pay survey is the way of alignment and justification of organization’s compensation
levels with respect to the external organizations pay structure.

Critical Pay Survey Problems

 Obtaining Proper job match: Firms encompasses jobs with similar titles with significant
different duties accurate job matching becomes both more difficult and more important.
 Collecting useful data: It is very difficult to collect data from questionnaire as it always
lacks intended requirements.
 Ensuring an acceptable sample of organizations & jobs: Jobs, pay varies among
organization. To ensure acceptable sample every organization must be surveyed which is a
cumbersome process.
 Relating data to Organizational Pay Policies: The costs involved in acquiring valid and
reliable data must be understood and accepted by whole organization.
 Integrating market pay data with internally generated job worth data and pay structure
design data: Those who collect and analyzes those data must understand the importance of
these data.
 Recognizing the goals of pay survey data designers and implementers: The collected data
might be manipulated so that
 Analyzing & making inferences from collected pay data.
 Recognizing Pay As One Component Of The Total Compensation Or Total Reward System
Of The Organization:
 Using Third-Party Data vs Performing A Survey:

Pay for performance

Pay for performance is a system of employee payment that compensates employee by measuring
work quality or goals.

Barriers to Pay for performance

 Significant variation in the work of employees.

 Difficult to observe complete work cycle.
 Sometimes various works needed to be performed situation wise such as once a week,
month etc.
  The due time for an employee to finish a task may not adequate enough to align with
his/her skills and knowledge which is why it creates barrier.
 An individual can finish his/her assignments by interacting with other employee, for that
reason the completion credit somewhat goes on the skills of the other or corporation.

Merit pay

Merit pay is a system, where one is paid on the basis of the achievement of targets by an individual.

Job matching

A type of survey where respondent match benchmark job with existing job within their organization
through various identifying factor supplied by survey.

Class matching

Job class is classed with numeric numbers or letters where A or I is most advanced paid employee.

Job evaluation

Process of identifying the relative worth of a jobs within an organization based on the jobs content and
compelexity.

Occupational Survey Method

Combination of JM+CM, Class is identified first and then repondent asked to rate the pay within the
groups.

1) Individual incentive plan

2) Group incentive plan

1) Individual incentive plan: it may either be time based or production based. Under time
based plan a standard time is fixed for doing the job. A worker is said to be efficient if he
completes the job in time and he is given the reward for his efficiency.

i) The time based individual incentive plans are:

a) Halsey plan

b) Rowan plan

c) Emerson plan

d) Bedeaux plan
 a) Halsey plan: under Halsey plan minimum wages are guaranteed to every worker. A standard
time is fixed for the workers. If the workers finish the work before standard time they are given
bonus. But no penalty if they fails to do that.

Total wages (W) =T*R+ 50% of (S-T)*R

Standard time(S) =15 hours

Time taken (T) = 10 hours

Rate of wages(R) =rs 10 per hour

Bonus (P) = wages of 50% of time saved

Than wages= 10*10+50 %*( 15-10)*10 = rs 125

b) Rowan plan: it is the modification of the Halsey plan it also guarantees the minimum wages
and does not penalize the slow workers. Standard time is fixed and the bonus is paid on the basis
of time saved

Total wages (W) =T*R+[T*R* Time saved/ Standard time]

Standard time(S) =15 hours

Time taken (T) = 10 hours

Rate of wages(R) =rs 10 per hour

Bonus (P) = Time saved/ Standard time

Than wages= 10*10+[10*10* 5/15] = rs 133.33

c) Emerson plan: in this plan minimum wages are guaranteed to the workers efficiency is
measured on the basis of the comparison of actual performance with the standard fixed. Under
this method if the efficiency is 100% the bonus would be paid at 20% and above 100% bonus at
30% would be paid. Thus efficient workers will be rewarded at an increasing rate with the
increase in saving time.

d) Bedeaux plan: under this minute is the time unit described as the standard minute. The
standard time for each job is fixed after undertaking time and motion study expressed in terms of
B. the standard time for a job is the number of B’s allowed to complete it. Generally the bonus
paid to the worker is 75% of the wages for time saved. The rest 25% goes to the foreman.

Standard time(S) = 360 B’s (6hours*60 minutes)

Actual time (T) =300 B’s (5hours*60 minutes)

Wage rate(R) = Rs 10 per hour

Value of time saved=360-300/60*10

=Rs10

Total wages (W) =S*R+75%of value saved

=6*10+75/100*10

=Rs67.5

The above discussed wage payment methods were based on the time while the wage payment
methods based on the productivity are going to be discussed below:

ii) The production based individual incentive plans are:

Under the production based incentive plan a standard output is fixed and the workers are paid on
the basis of the production. They are given incentive if they produced more number of units than
the standard fixed. it includes the

a) Taylor plan

b) Merrick plan

c) Gantt plan

a) Taylor’s differential piece rate system: in this plan, Taylor did not give minimum guarantee
to each worker. As per his statement it is possible to calculate standard workload for every
worker on the basis of time and motion studies. He gave two piece rates for the workers. The
lower rate for average and less efficient workers who produce less than the standard production
and the higher piece rate for the above average or efficient workers. So the efficient workers are
paid more than the inefficient workers.

Standard production = 40 units in a day

Wage rate = between 60 to 70 rs

If the worker produces 40 units in a day he will be paid 40* 70= rs 280

If the worker produces 30 units in a day he will be paid 30* 60 = rs 180

As only those who give standard output or more will be paid at rs 70 and rest will be paid at rs 60
only.
Thus in this method inefficient workers are penalized. Workers are treated like machines and
there is no guarantee of minimum wages in this method.

b) Merrick’s multiple piece rate plan: under this plan there are three grade piece rate rather
than two given by Taylor.

Workers who produce Less than 83% are paid basic piece rate

Workers who produce between 83%- 100% are paid 110% of basic piece rate

Workers who produce more than 110% paid 120% of basic

Thus this system is improvement over the Taylor’s plan. But this system also does not give
guarantee minimum wages to the workers. All the workers producing between 1 to 82% of
standard output are considered same and paid at the same piece rate.

c) Gantt’s bonus plan: under this method minimum wages are guaranteed. If the worker fails to
complete the task within the standard time he receives only the wages for actual time spent at the
specified rate. But if he completes the task within time he gets extra wages.

Standard time= 10 hours

Rate= rs 8 per hour

Bonus 25% of the standard time

If the worker finishes his job within 8 hours he will get rs 80 plus 25% of the day’s wages i.e.
80*25%=20 that means total rs 80+20= rs 100 so he will get bonus for 8 hours work.

2) Group incentive plan: under this method group bonus is given instead of individual bonus.
The bonus is distributed among all the employees of the organization on the different basis
which are as follows:

a) Priestman’s plan: under this method Bonus is increased in proportion to increase in output.

Increased production/standard production*100

b) Profit sharing method: under this method increased profit is shared among the workers and
management as agreed between both the parties.

c) Scanlon plan: under this method bonus is paid in proportion to the production 1% bonus if
1% increases in production.
Contents of Company Payroll

1. Gross Wages: The total dollar amount paid to the worker, before any deductions. Gross wages
may include commissions, bonuses and other payment arrangements.

2. Benefits: Facilities in the form of health insurance, retirement plans and other benefits to
workers.

3. Social Security and Medicare: Social Security and Medicare payments from gross wages.

4. Tax Withholdings: The employer must withhold the employee’s share of federal and state
income taxes from payroll. Depending on the location, the company may also need to withhold
local or city income taxes from payroll. The amount of money the employee actually receives in
their paycheck is known called net pay.

Benefits of Using HRIS

 An effective HRIS provides information on just about anything the company needs to track
and analyze about employees, former employees, and applicants.
 On the operational level HRIS data can be used to identify potential internal applicants for
job vacancies, saying external recruitment costs and assuring employees of career
opportunities.
 HRIS enables the human resource department to make a more active role in organizational
planning. Computerization will make forecasting more timely, cost effective, and efficient.
 HR functional and tactical processes can manage compliance with federal and state laws,
streamline processes for recruitment and selection, and produce analyses, data and reports
for internal and external use.
 Other advantages of an HRIS include the ease of use for qualification computer technology
specialists, accuracy of information and the ability to perform HR audits using any
combination of parameters.
 Finally, managers can access the information they need to legally, ethically, and effectively
support the success of their reporting employees. Specific benefits of such systems include:
 Faster information process
 Greater information accuracy
 Improved planning and program development
 Enhanced employee communications
 Reduction in cost of stored data in HR
 More transparency in the system
 More meaningful career planning &counseling at all levels.
 Better ability to respond to environmental changes.
TLE is an allowance intended to partially pay members for lodging/meal expenses incurred by a
member/dependent(s) while occupying temporary lodging in the Continental United States (CONUS) in
association with a Permanent Change of Station (PCS) move.

26
INTERNATIONAL HR ADVISER
AUTUMN
Hardship premiums or hardship
allowances are paid to employees
who are assigned to a country with
difficult conditions. They can make
up to 30% or sometimes more of
their salary. There is something
fundamentally wrong with them

an amount of money paid to workers who are required by their jobs to move to a different place

Home Leave Allowance. You and each family member that is relocating with you are entitled to one
round-trip home leave to return to the U.S. for each complete year you are on assignment. In addition,
any immediate family members (e.g., university aged dependent children) not accompanying you on
assignment are entitled to two round-trip flights to the U.K. for each complete year you are on
assignment

Allowance of carrying extra baggages