Incentive wage plans:
Incentive wage plans are popular all over the world and are used for raising productivity.
They offer attraction of extra payment for efficiency or more production. The main purpose of incentive plan is to increase the production by giving an extra payment to the workers. It is also called payment by result and a managerial device for increasing production. It is the method of sharing gains in productivity with the workers by rewarding them financially for their increased productivity.
Importance of incentive wage plan:
1) Employees are encouraged to find out the new methods to increase productivity.
2) Employees need less supervision.
3) This method helps in maintaining good human relation between the workers and the management.
4) This method develops a feeling of cooperation between the workers and the management.