What is Halsey and Rowan Premium Plans

अनुक्रम (Contents)

What is HALSEY PREMIUM PLAN

Halsey and Rowan Premium Plans was introduced by F.A. Halsey in 1981. It is a simple combination of time and piece rate system. The main features of this plan are a follows-

1. Workers are paid at a rate per hour for the actual time taken by them.

2. A standard time is set for each piece of work, job or operation.

3. If a worker takes standard time or more than standard time to his work he is paid wages for the actual time taken by him the time rate.

In other words, under this method time wages are guaranteed.

4. If a worker takes less than standard time, he is paid a bonus equal to 50% of the time saved at the time rate fixed.

Thus, under this system, total earnings of a worker are equal to wages for the actual time taken by him plus a bonus.

Halsey Premium Plan Formula

The formula for calculating bonus and total earnings is as follows-

(a) Bonus = 50% of [Time saved Time rate]

(b) Total Earnings = Time rate Time taken + 50% of [Time Saved * Time rate]

Advantages of Halsey Premium Plan

1. It is easy to understand and easy to work.

2. Under this system efficiency is not penalized.

3. It records efficiency so it is more profitable for efficient workers.

4. As bonus is given only for the time saved, incentive is given to workers to save time.

5. The saving in time results in reduction in labour cost per unit and fixed overhead cost per unit.

6. This scheme is beneficial for both employer and employee.

Disadvantages of Halsey Premium Plan

The main disadvantages of this method are:

1. Extra efficiency of a worker is not fully rewarded.

2. Fixation of standard time is really a difficult task.

3. If standard time is not correctly fixed, there may be disputes between employer and the employee.

4. Workers do not like the employer to share the benefit of time saved the by them.

5. Under this method the quality of the product is deteriorated.

What is Rowan Premium Plan

This plan is also similar to Halsey plan except the calculation of bonus. The main features of Rowan Plan are as follows:

1. Wages are paid on time basis for the actual time worked by the workers.

2. A standard time is determined for each piece of work.

3. If a worker completes his work in standard time or in more than the standard time, he is paid wages for the time actually taken by him.

4. If a worker completes his work in less than the standard time. he is entitled to a bonus.

5. Bonus is that proportion of wages of actual time taken which the time saved bears to the standard time.

Rowan Premium Plan formula

(a) Bonus = Time Saved / Time allowed x Time taken x Time rate

(b) Earnings = (Time taken Rate) + Bonus

Advantages of Rowan Premium Plan

1. Like Halsey plan, it provides guaranteed minimum wage to workers. That means, inefficiency is not penalized.

2. It provides quarter incentive (bonus) than Halsey plan up to 50% of the time saved.

3. It protects the employer against loose rate setting, i.e.. against errors in the setting up of standards.

4. The gain arising from the time saved by the worker is shared by both employer and employee.

5. It results in reduction in labour cost per unit.

6. It contributes to reduction in fixed overheads cost per unit.

7. It acts as a check on over-earnings.

Disadvantages of Rowan Premium Plan

The main disadvantages of this system are:

1. This system can not be easily understood by the workers.

2. This method of incentive wage payment is not easy to operate.

3. This system encourages inaccuracies in rate fixing.

4. The incentive given to workers, under this method, is low at higher levels of efficiency. That means the incentive given to a more efficient worker is very low.

5. The sharing of the gain arising from the time saved by both the employer and the workers provided for under this method workers.

Difference Between Halsey and Rowan Method

The main difference these two schemes are-

1. Halsey scheme is simple to understand and execute, whereas Rowan difficult to understand and execute.

2. Under the Halsey scheme, the gains arising from the time saved is shared by employer and employees equally but under Rowan scheme it not shared equally.

3. Under Halsey plan, bonus is given for 50% of the time saved at the hourly rate. But under the Rowan plan, bonus is given for that portion of the time taken which time saved bears to the standard time at the hourly rate .

4. Under the Halsey plan, bonus increases steadily with rise in efficiency But under the Rowan plan, bonus increases rapidly up to a saving of 50% of the standard time and thereafter it decreases .

5. When the work is completed less than half of the standard time. Halsey plan provides more bonus than Rowan plan On the other hand, when the work is completed in more than 50% of standard time, Rowan plan provides more bonus than Halsey plan.

6. The labour cost pp. under the Rowan plan is more than that under the Halsey plan up to a saving of 50% of the standard time But beyond 50% of the saving of the standard time, the labour cost p u under the Halsey plan is more than that under the Rowan plan.

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