Standard Hour Plans: Halsey Plan

This plan, originated by F A Halsey (an American engineer) identify individual efficiency & pays bonus on the basis of time saved. The major features of this plan are following:

• Standard time is fixed for each of job or operation.
• Time rate is guaranteed & the employee receives the guaranteed wages irrespective of whether he finished the work in the time allowed or takes more time to do the similar.
• If the job is finished in less than the standard time, the employee is paid a bonus of 50% (33 1/3 % under Halsey-Weir Plan) of time saved at time rate additionally to his normal time wages.

Total Earnings = Time taken × Hourly Rate plus Bonus

Bonus = 50percent of time saved

Merits

• It is simple to follow and comparatively simple to operate;
• It guarantees minimum wage and so provides safety to the employees;
• It provides enhancing benefit & incentive to efficient workmen;
• The benefit from time saved is equally shared among the employer and the workman;
• It emphasises the saving of time instead of larger output, therefore the workers do not resist its adoption.
• The system is dependent on time saved and not on output, therefore preventing over manufacture.
• Saving in time decrease both labour cost and overhead expenses.

Demerits

• The employee may be encouraged to rush through work and so neglect the quality of manufacture to save more time & earn higher bonus;
• It does not provide sufficient incentive to highly capable workmen as it involves sharing of the advantage with employers.
• Fixation of standard is not simple.
• Earnings are dropped at high level of efficiency. Consequently, it does not behave as a sufficient incentive.