Accelerated Premium Bonus Plan

This plan is also called as Sliding Scale Bonus Plan because the premium is paid at altering rates for rising efficiency. In this plan, as efficiency of worker enhance, his earnings would enhance in higher proportion. This plan is most appropriate for foremen & supervisors because it will stimulate them to obtain higher production from workers under their supervision but this is not suitable to use it for machine operators who might rush through work to earn more, disregarding quality of manufacture.

There is no easy formula for this scheme. So, each of firm ought to devise its own formula. Though, by way of illustration, a graph of y = 0.8x2 might be given as common picture of the scheme (where x is percentage efficiency 100 ÷ and y = wages).

Therefore

Percentage efficiency  100      110      130     150

                         x         1          1.1       1.3      1.5  

                         x²         1       1.21       1.69    2.25

                    Y = 0.8x²   0.8     0.97     1.35    1.8

An Individual Incentive plan is probable to be more effective under particular circumstances:

1. The task is liked.
2. The task is not tedious.
3. The supervisor reinforces & supports the system.
4. The plan is adoptable to employees & managers and probably includes them in the plan's design.
5. The incentive is financially adequate to induce increased output.
6. Quality of work is not especially significant.
7. Most of the delays in work are under the employees' control.

T.L. Ross et al, "The Incentive Switch", Management Review, 18, May 1989.