Apparel Industry Management

Apparel Industry Management 3(3+0)

Lesson 28 : Incentives

Pre-Requisites of Effective Incentive System

All things considered, it may be concluded that in many industries or undertakings and for a large group of operations, well-designed systems of payment by results shall yield advantages to all concerned. Many of these advantages will be realized provided sufficient safeguards are provided. Such pre-requisites are:

1. The co-operation of workers in the implementation of an scheme is essential because the employees somehow devise, if they do not like a scheme, ingenious ways of evading or sabotaging, the plan, often with the tacit connivance of the foreman or supervisor.” Workers co-operation may be secured through proper discussion with their representatives”.

In particular, workers co-operation is necessary in:

1. the methods followed in measuring the results or output upon which payment is based
2. the methods followed in setting wage rates for different classes of work; and
3. appropriate safeguards concerning earnings, job security and settlement of disputes over piece-work rates and allotted time.

To prove that the schemes were often introduced without workers co-operation and consequently met with failure, we quote the following:
‘……the practice adopted by several industrial establishments in the Bombay region in regard to the preparation of an incentive scheme is to hire an industrial consultant and to make him work in the establishment under the cloak of secrecy, until a scheme has been finally prepared. It is only after several months that the workers of the establishment and their unions begin to suspect that some scheme is under preparation. Trade union leaders, who are not employees currently, are not even allowed to watch how standards have been evolved. Naturally, the workers reject out-of-hand, a scheme prepared so surreptitiously.10

2. The scheme must be based on scientific work measurement. The standards set must be realistic and must motivate workers to put in better performance. Workers must be provided with necessary tools, equipment and materials so as to enable them reach their standards.
3. Indirect workers, such as supervisors, foremen, charge hands, helpers crane operators, canteen staff, store keepers, and clerical staff should also be covered by incentive schemes.
4. There should be management commitment to the cost and time necessary to administer incentive schemes properly, and these must be carefully assessed before embarking on an incentive programme. There are many situations in which the potential gains are just not worth the cost effort involved. It also means a commitment in terms of integrity to the spirit as well as the letter of the programme – having the courage to abide by it when the payout deteriorates and the honour to own up when results are not forthcoming.11.
5. There is greater need for planning. Many incentive schemes, started hurriedly, planned carelessly, and implemented indifferentely have failed and have created more problems for the organization than they have tried to solve. This was what happened to the three big plants of Hindustan Steel (now SAIL), where an incentive scheme was introduced during 1960s. Though the initial objective of raising the output of steel was achieved, problems arose regarding production of sophisticated items and improvement of the quality of products. The scheme did not function satisfactorily from the point of view of maintenance of plant and equipment, which, in turn, affected output. The performance of ancillary units like repair shops, was unsatisfactory because the incentives in these shops were based on the overall steel production and not the units’ own performance. Thus, the need for careful preparation for the installation of an incentive scheme.