Q          What are the merits and demerits of incentive based schemes of remuneration?

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Ans

P.S. In exams, you should not write differentiation in the below format. It should be written paragraphwise or pointwise. The below format is just for your better understanding.

Sr. Merits of Incentive based Remuneration Demerits of Incentive based Remuneration
1. It is accepted as a sound technique for the achievement of greater productivity It is not considered a very good scheme in countries in the West where it is mostly prevalent.
2. For employers the need of vigorous supervision is reduced. It tends to create tension among different workers in an organization.
3. Workers have the advantage of working in a relatively calm atmosphere because of minimum vigilance on them by the superior. A poor performer will earn very little.
4. The incentive is directly linked with the productivity of the worker. Tensions caused by incentive schemes would give rise to internal relations problems which would be a serious matter of concern for the management.
5. The more the worker produces the more he earns. The tension created would eventually affect the total output.
6. Higher productivity is an important perquisite of economic development. A great sense of understanding the problems of human relations and that of engineering is required for the smooth administration of such incentive schemes.

 

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