Incentive Bonus Scheme, Payment by Results

Incentive Bonus Scheme, Payment by Results

• Railway Board took a decision in 1949 to introduce some form of incentive scheme in railway workshops.
• The first formal incentive scheme was introduced in Chittaranjan Locomotive Works in December 1954.
• extended to Integral Coach Factory in 1960.
• introduce the incentive scheme in Railway Repair Workshops on Chittaranjan pattern was taken in 1958.
• actual introduction was effected in 1960 after setting up the "Production Control Organisation" in individual railway workshops
• the basic wages are guaranteed to all the workers. 
• Time  the yardstick for measuring work.
• allowed time are so fixed that the workman of normal ability may earn 33-1/3% bonus over and above his basic wages in respect of period spent on piece-work jobs.
• The scheme is based on the concept that an average worker while working under non-incentive conditions is assumed to be working at a rating of 60 units. The same worker while working under incentive conditions would be expected to improve his rating to 80 units i.e. 33-1/3% more. 
• It is expected that an average worker would complete an operation in 3/4 of the allowed time. The time saved/lost on the time allowed in each operation is calculated separately for each worker and the gain/ loss can not be carried over to the next month. The ceiling limit of profit is fixed at 50% of the time taken in each of the operation. 
• The incentive workers are classified as Direct, Essential Indirect and Indirect Workers.

• a) Direct workers are those engaged in work which can be assessed through time studies.

• (b) Essential Indirect workers are those who contributed to the continuity of the work and whose services are essential but whose work cannot be assessed through time studies. Supervisors upto the rank of Chargeman are also included in this category.

• (c) indirect Workers are those who are provided for cleaning etc. do not contribute directly or indirectly to production and do not earn any incentive bonus.

• Timing of operations-Time standards should be fixed for individual operations on or with the aid of particular machines and materials and the time taken by individual worker should be carefully recorded.
• Time Study—The time Study is the detailed record of series of events on a floor to floor cycle, which accounts for all elements of work both effective and ineffective (the time during which man or machine or both are idle), the effective time having been rated and ineffective time classified. 
• Synthetic Times—Synthetic times (or synthesized time standards) are time standards built up (synthesized) from element times previously obtained from direct time studies.
• Rating.- Rating is the assessment of the skill and effort involved in each element and every element should be rated independently of previous elements. working at a 60 rating. This can be interpreted as saying that he is producing 60 units of work per hour. This same average worker when working under a properly applied incentive scheme works at a speed and with such effort as to earn 33-1/3% more i.e. at an 80 rating, can then be said to be producing 80 units of work per hour. If he is working at half the effective speed, he is working at 30 rating or alternatively if he is working at double the effective speed, he is said to be working at 120 rating. 
• Normalizing.—On completion of the time study, the actual times of all the elements in the work cycle should be converted to time at 80 rating i.e. the time which the average worker should take to do each element when working under a correct incentive scheme. This conversion is done by the following calculation:
• Normalized Time =  Actual time x observed rating 

                                          80 i.e. Incentive rating

• Additional Allowances.—The following allowances are added in the normalised operational time on an cumulative basis: —
• (a) General handling and Contingencies: This includes cleaning swarf, grinding of tools, using of spanners, procuring cutting compound etc. and for this purpose, an allowance upto10% on the operating time is given.
• (b) Gauging on machining: 5% allowance is added for all machining operations where gauging is necessary.
• (c) Fatigue.—As it is not humanly possible for any person to work continuously with a set-speed, an allowance to cover fatigue is added.Since this varies with the types of work, an allowance upto 12½ %  is given.
• (d) Production bonus: An allowance of 33⅓% is added as production bonus.
• Allowed Time.—The total of the normalized time and all the additional allowances stated above is termed as "allowed time"'. The allowed time as issued by the Rate Fixing Department with the approval of Production Engineer, is the time within which a worker shall complete an operation and earn bonus. It is expected that the average worker will complete an operation in 75% of the allowed time when he will earn 33 ⅓ % bonus. 
• Preparational Time.—Whereas the operational time is per piece, the preparational allowance is added per batch which allows a worker to prepare to take on the new job such as collecting and drawing tools, raw materials etc. and obtaining necessary instructions.
• Time taken.—Job cards/squad cards are the basic documents on the basis of which incentive bonus is calculated. Job cards/squad cards are used for booking of time spent by workers on jobs. The job/ squad cards punched 'on' and 'off' with the aid of time recording blocks, when operations are commenced and completed respectively.
• Time Saved/Time Lost.—(i) The difference between the "time allowed" and the "time taken" is the time saved, if the former is greater than the latter and "time lost" if it is otherwise, The time taken is ascertained from the time of commencement and completion as recorded on the job/squad cards. The allowed time will comprise of the following:

• (a) Time per piece multiplied with the quantity passed by inspection.
  (b) Preparatory time per batch; and
  (c) Extra time allowed by the rate fixer as per extra time card.

  (ii) Where two or more workers are engaged on the same job, the net time saved/lost from each squad card as worked out will be distributed over the workers in proportion to the time taken by each of them.

  (iii) Allowed time on job cards should be adrema printed. The allowed times on squad cards should be supported with detailed printed/cyclostyled inspection cum computation sheets.

• Ceiling limit on profits.—Ceiling limit on profits has been fixed at 50% of the standard basic wages in respect of each job /worker. Accordingly 'time saved' against each job, squad card is restricted to 50% of checked up "time taken" as recorded on each card.

• Incentive Bonus Rates.—Time saved or lost will be evaluated at the Incentive Bonus hourly rates as fixed by the Railway Board for different categories of staff from time to time and circulated to the Railways.

  The current rates effective from 1.9.99, till further amendment, are as under:

  Designation	Pay Range	Hourly Rate
  	Rs.	Rs.
  Jr. Engineer Gr. I	5500-9000	26.45
  Jr. Engineer Gr. II	5000-8000	24.00
  Senior Technician	5000-8000	24.00
  Supervisor	4500-7000	21.65
  Technician Gr. I	4500-7000	21.65
  Technician Gr. II	4000-6000	19.25
  Technician Gr. III	3650-4590	17.55
  Technician Gr. III	3050-3575	14.65
  Semi skilled	2750-4400	13.20
  Unskilled	2550-3200	12.25

  
  
• Incentive Bonus to essential indirect workers and Supervisors.—(1) Supervisors upto the level of charge man viz. mistries and chargoman and essential indirect workers participate in the incentive bonus subject to their earnings being restricted to 80% of the average percentage of profit earned by direct workers supervised by them. Mistries, however, will be paid 100% of the average percentage of profits earned by direct workers under their control.

• Payment of incentive bonus—(a) Direct workers.—Payment of incentive bonus to Direct workers is made monthly along with the monthly salary. The payment of bonus to Direct workers is made on the basis of net time saved. The total of time taken as recorded on job cards is deducted from the total allowed time obtained from job cards passed by the inspectors. Time saved/lost for each operation is worked out with the restriction that the time saved is not more than 50% of the time taken on each card. The net time saved is multiplied by the prescribed rate of the category of worker and bonus paid accordingly.

  (b) Essential Indirect Workers and Supervisor— Essential Indirect Workers are paid bonus at 80% of the average bonus earnings of the section. 

• Deduction from supervisors for idle time.— Shop chargeman/mistries are directly responsible for (i) lack of work and (ii) lack of tools. Therefore, for the idle time arising out of these two causes, proportionate deductions on the following scales should be made from the incentive bonus earned by chargeman/ mistry concerned.

  Idle time of direct workers	Percentage of Incentive Bonus to be debited to Chargeman /Mistry
  1.           2 % and above but less than 5 %	10%
  2.           5% and above but less than 15 %	20%
  3.           15% and above .	No bonus

  
  
• Apprentices.—Apprentices are not eligible to participate in the incentive bonus scheme.

• Idle time.— (I) All possible steps should be taken for preventing idle time considering that apart from wages having to be paid for no work done, it entails huge avoidable losses in production. The time taken up in delays and holdups, due to breakdown of service or plant or any other cause for which the direct worker cannot be held responsible should be booked to "idle time" and all time so booked should be carefully investigated, responsibility for the delay or breakdown located and such steps, as may be, considered desirable, taken to prevent such waste.

  (2) To record idle time, there shall be an "idle time card" for each worker for each month. These cards will depict the reasons as detailed below on the reverse of the idle time cards for the analysis of idle time. These cards will remain in the custody of time booth clerk and shall be punched on /off with the commencement /cessation of idle time on the authority of idle time slips issued by chargeman. Idle time cards shall be signed by chargeman and countersigned by shop superintendent and shall be sent to the accounts office along with the job cards.

  (3) Idle time shall be chargeable against shop on cost work order. However, idle time upto 15 minutes in each case may be allowed to be booked against job card concerned and not accounted for as idle time.

• Checking of Job Cards.—The job cards received in Incentive section of the Accounts Office should be checked to see that:—

  (i) These have been inspected and signed with date by the shop inspector for the quantity passed;

  (ii) All the corrections in the pre-printed job cards bear the dated signature of the shop rate fixer under his designation.

  (iii) Total of the "Time Taken" as struck on the job cards by the Time booth clerk tallies with the details on the job cards.

  (iv) "Total allowed time'" will be worked out on the basis of the 'passed' outturn. The allowed time as appearing on the job card should be checked with that approved by the P.E. by comparison with the master planning card or list of allowed times approved by Production Engineer. For this purpose, a copy of each master planning card should be supplied by the P.E. to W.A.O. This check may be exercised as a percentage post check (under orders of the FA& CAO) in such a way that all "allowed times" get checked in rotation.

  (v) Time saved/lost for each operation shall be worked out taking care that the time saved against job card/squad card is restricted to 50% of checked up "time taken" as recorded on each card.

  (vi) Hand written job cards are certified by AW/ P.E.

  (vii) Excess time card is attached with the job card wherever 'excess time card' is indicated.

  (viii) Out-turn statements are certified by the Inspector and are signed by the shop supervisors. For excess time and for the items of work not covered by the approved list, there should be signature of the rate fixer.

  (ix) It should be ensured that No. of direct workers, essentially Indirect Workers and supervisors in whose favour bonus has been billed for, are not in excess of the sanctioned strength.

  (x) All the job cards as per monthly statement showing serial nos. of job cards supplied during the month as received from the time booths have been taken into account.

  (xi) Proportionate deductions are made from the profits earned by Chargeman/Mistries, if idle time of production workers on account of lack of work and lack of tools is 2% and above.

  (xii) Amount of bonus to Chargeman/Mistries is in the ratio which the total No. of direct workers under incentive bears to total number of direct workers in the section.

  Detailed instructions for checks to be exercised on the job cards and bills of incentive bonus may be laid down by the Financial Adviser & Chief Accounts officers of each railway to suit the local requirements.

  (xiii) The idle time cards attached with the job cards should be checked with idle time slips issued by shop chargeman. All the idle time cards should have been personally checked by Works Manager/Assistant Works Manager within 24 hours of being punched "IN".

  (xiv) Job cards should be supported by suspension/ resumption slips if there have been punching "OFF" and punching "IN" due to suspension/ resumption of jobs. Suspended job should be rigidity checked by Works Manager/Assistant Works Manager and suspended jobs for one month to another month should be checked by Production Engineer/Assistant Production Engineer.