How Can We Fairly Calculate Incentives for Our Modular Furniture Team?

Our company is a modular furniture manufacturing company. We want to pay incentives quarterly. We want to know how we can calculate an incentive plan for workers as well as office staff. Is there any defined or authenticated plan on how we can calculate incentives?

Can anybody help us with how to proceed in calculating the incentives?

Satish Pandey

Dear Satish, you have not provided sufficient information about your query. We, the members of this forum, do not know the production capacity, the number of employees, how production is calculated, the number of shifts workers operate in, etc. Additionally, when designing incentive schemes, the quality of the finished product is also crucial. Therefore, please provide more detailed information first. You are welcome to share your current incentive structure as well.

Types of Incentive Schemes: Individual and Group Incentive Schemes

In the meantime, you may find the following link helpful: http://Types of Incentive Schemes: I...entive Schemes

Thanks,
Dinesh Divekar

Incentive Plans Across Industries

There are no universal incentive schemes spread across many industries. The incentive plan has to be unit-specific and depends on multiple factors like production capacity, level of utilization achieved, cash generated, rejection or rework quantum, number of direct workmen involved, number of indirect workmen involved (like maintenance, store, materials management, sales, etc.), and office staff.

Considerations for Incentive Plans

As regards the incentive plan, while the direct workmen will have payment linked to their efficiency, the output of indirect as well as office staff may not be directly measurable, and certain other indices have to be used. So all these factors have to be studied in depth before any incentive is planned, and you may need the expert service of Industrial Engineering.

HR Perspective on Incentives

From the HR point of view, the general idea is to share with employees the extra gains of additional production achieved as a result of the implementation of the incentive plan.