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Labour-Other incentive Schemes

Other Incentive Schemes:

Incentives are not always provided in form of money. It is possible to provide incentives in other forms as well. Thus, classification of incentives may be into: (1) direct monetary incentives, (2) indirect monetary incentives, & (3) non-monetary incentives.

Direct monetary incentives are provided by the above discussed bonus plans.

Indirect Monetary Incentive Schemes:

 Under this head, out of many only 2 schemes – (a) Co-partnership scheme, & (b) profit sharing scheme have been discussed, which on the basis of the prosperity of the organization provides the employees some extra remuneration.,   This may be termed indirect monetary incentives, because the extra remuneration is not directly based on the efficiency of any individual, group or department.

 (a) Co-partnership Scheme:

Under this scheme, some shares are given to the employees so that they can get share of profit. Such shares may or may not carry voting rights & are known as employees’ shares. The employees may be either allowed to deal freely with such shares or some restrictions may be imposed by the company on employees on the dealing in such shares. To enable the employees to purchase the company’s share, loans may be advanced by the company to the employees or employees’ shares may be issued by the company against any extra remuneration payable to them under some award or so. Simultaneous introduction may be made of the co-partnership & profit-sharing schemes.

Merits of the scheme:

(1) Amongst the worker, the sense of belonging to the organization is improved.

(2) The morale of the workers is improved.

(3) Workers are induced to produce more profit, a share of which is enjoyed by them.

 (4) The employees believe that the share of their profit will get reduced by wastage of the company.

Demerits of the scheme:

(1) There is no distinction between efficient & inefficient workers, because bonus payment is not based on performances.

(2) Since the employees have no access to the accounts, this may create doubts in the mind of employees. This may lead to strikes, closure, unrest etc.

(3) Because payments are subject to finalization of accounts, it may get delayed.   

(4) There is no inter-relation between the efforts & rewards of an individual worker or of a group.

(b) Profit-sharing Scheme:

According to this scheme, the workers get a share of the profit of the organization in addition to their wages; such share is settled by an agreement between employers & workers beforehand. In India, Payment of Bonus Act prescribes 81/3% of salary as minimum bonus payable & 20% of salary as maximum bonus payable. Under profit-sharing scheme, the shareholders, the company & the employees share the profits of the company.

All the advantages & disadvantages applicable to co-partnership scheme are equally applicable in case of profit-sharing also.

Non-monetary Incentive Schemes:

The non-monetary incentives schemes relate mostly to the working conditions & not to the job functions. The objectives of providing non-monetary incentives are: (a) for offering the workers, better working conditions; (b) for building worker’s physical & intellectual health; (c) for letting the workers to have a sense of security of life; & (d) for removing any type of discontent amongst the workers.

Out of quite a good number of non-monetary incentives forms, some are mentioned below:

(a) Housing & medical facilities;

(b) Leave travel concessions;

(c) Free or subsidized canteen facilities;

(d) Free education for workers & their children;

(e) Sending for higher training;

(f) Retirement benefit schemes;

(g) Sports & Recreational facilities;

 (h) Health & Safety measures etc.

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