M/s Zeman Ltd. deals in consumer goods. It employs 100 workers and 10 operative managers who give guidance and support to the workers while operating the machinery. The company has a policy of granting leave as per the requirements of the workers. Workers are generally granted leave on festivals and special occasions. Recently, at the Puja festival, it received a big order. Workers were keen to take Puja holidays while management was pressing hard for overtime. This matter was placed before the Personnel Manager, who called the meeting of operative managers by circulating a circular among the operative managers. Operative managers were told to inform the workers about the changes in the incentive plan which states payment of double wages for working overtime and triple wages for working on holidays. Workers, without any pressure, voluntarily took limited holidays and were able to increase their earnings by working overtime and on holidays. During the Board of Directors meeting, the Personnel Manager was asked to update the management to achieve higher output, meeting timely supplies without any confrontation with workers. The personnel manager replied, “I just used a carrot with a no-sticks approach”.
Which type of incentive is highlighted in the line, “incentive plan which states payment of double wages for working overtime and triple wages for working on holidays.”?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Productivity linked wage incentive
Option (1) Productivity linked wage incentive — Correct. This is a financial incentive in which the pay is tied to the work done. Double wages for overtime and triple wages for holidays pay the workers more when they produce more, so the reward is linked to productivity.
Option (2) Non-Financial incentive — Incorrect. Non-financial incentives, such as status, job security or recognition, do not involve money. Here the reward is money.
Option (3) Differential piece wage system — Incorrect. This is Taylor’s technique of paying a higher rate per unit to those who reach a standard output and a lower rate to those who do not. The plan here pays for extra hours, not by comparing each worker with a standard.
Option (4) Perquisites — Incorrect. Perquisites are benefits over and above salary, such as a car, a house or medical aid, usually given to managers.
NCERT (2026-27 Edition): “Financial and Non-Financial Incentives … Financial incentives refer to incentives which are in direct monetary form or measurable in monetary term and serve to motivate people for better performance. …” “(ii) Productivity linked wage incentives: Several wage incentive plans aims at linking payment of wages to increase in productivity at individual or group level.” “(vii) Perquisites: In many companies perquisites and fringe benefits are offered such as car allowance, housing, medical aid, and education to the children, etc., over and above the salary. …” |