halsey and rowen are examples of:
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Answer:
Read this article to learn about the four reasons for which Rowan Plan is better than the Halsey plan with formula and calculation of wages under the two methods.
Both Halsey and Rowan plans are criticised by workers on the ground that they do not get the full benefit of time saved by them as they are paid bonus for a proportion of the time saved. The Rowan Plan has another drawback that two workers, one very efficient and the other not so efficient, may get the same bonus. Suppose, standard time fixed for a job is 20 hours. A finishes the job in 8 hours and worker B in 12 hours and labour rate per hour is Rs 1.50.
Rowan Plan Formula
Thus, two workers get the same amount of bonus.
The Rowan Plan is better than the Halsey Plan because of the following reasons:
1. Under the Halsey Plan, premium rate varies between 33⅓ % and 66 ½ % of the wages of the time saved whereas in the Rowan Plan, it is fixed and is calculated by applying the following formula:
Rowan Plan Formula
Thus, the Rowan Plan protects employer and workers against loose premium rate setting.
2. In the Halsey Plan, bonus is usually set at 50% of the time saved. It does not serve as a strong incentive. On the other hand under the Rowan Plan, bonus is that proportion of the wages of the time taken which the time saved bears to the standard time. It serves as a strong incentive for increasing the efficiency.
3. In the Rowan Plan, the quality of work does not suffer much. The worker is not induced to rush through the work because bonus increases at a decreasing rate at higher levels of efficiency. In the Halsey Plan, a worker is induced to rush through the work because he gets extra wages for every 50% of the time saved.
4. The effective labour rate per hour in the Rowan Plan is higher upto 50% of the time saved and falls thereafter whereas in the Halsey Plan, the effective labour rate per hour is lower upto 50% of the time saved and can be doubled thereafter. Usually, workers are not able to save more than 50% of the time allowed, so workers prefer the Rowan Plan for earning more wages.
Illustration 1:
The standard time allowed for the job is 30 hours. The hourly rate of guaranteed wages is Rs 1.50. Because of the saving in time, a worker X gets an hourly wage of Rs 1.80 under Rowan Premium Bonus System. For the same saving in time, calculate the hourly rate of wages a worker Y will get under Halsey Premium Bonus System.
Total Wages under Rowan System
Total Wages under Rowan System
Illustration 2:
A job can be executed either through workman A or B. A takes 32 hours to complete the job while B finishes it in 30 hours. The standard time to finish the job is 40 hours.
The hourly wage rate is same for both the workers. In addition workmen A is entitled to receive bonus according to Halsey plan (50% sharing) while B is paid bonus as per Rowan plan. The works overheads are absorbed on the job at Rs 7.50 per labour hour worked. The factory cost of the job comes to Rs 2,600 irrespective of the workman engaged.
Find out the hourly wage rate and cost of raw materials input. Also show cost against each element of cost included in factory cost.
Statement of Factory Cost
Statement of Factory Cost
Illustration 3:
Mr. A is working by employing 10 skilled workers. He is considering the introduction of some incentive scheme—either Halsey Scheme (with 50% bonus) or Rowan Scheme—of wage payment for increasing the labour productivity to cope with increased demand for the product by 25%.
He feels that if the proposed incentive scheme could bring about an average 20% increase over the present earnings of the workers, it could act as sufficient incentive for them to produce more and he has accordingly given this assurance to the workers.
As a result of this assurance, the increase in productivity has been observed as revealed by the following figures for the current month.
Halsey Plan and the Rowan Plan
Halsey Plan and the Rowan Plan