Taylor’s Differential Piece Rate Plan
F. M. Taylor (Father of Scientific Management) suggested his famous differential piece rate plan as an alternative to time rate s, ‘stem which he considered as unscientific or defective. In his plan, he has not made reference to minimum guarantee payment to each worker. According to him, it is possible to calculate standard workload for every worker on the basis of time and motion studies.
In his incentive plan, Taylor suggested two piece rates for the workers. The lower piece rate to those who are less efficient and give production below the standard workload fixed. The higher piece rate is suggested for those who are efficient and give production over the above the standard workload fixed. Naturally, an efficient and sincere worker will be paid at a higher rate and an inefficient worker will be paid at a lower rate. Let us illustrate this with an example. Suppose standard output is 30 units per day. The piece rates will be 50 paise and 40 paise per unit. Those, who give output of 30 units or more will be paid at a rate of 50 paise per unit while those give less than 30 units of output will be paid at a rate of 40 paise per unit. If a worker produces 30 units within a day, he will get Rs. 15/- per day but a worker who produces only 25 units will be paid RS. 10/- only. Thus, the wage rate will not be uniform for all workers. It will be higher for efficient worker and lower for inefficient worker.
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