Time Amount or Time Salary Program is the most popular technique of wage transaction. Known by various other names such as time perform, day perform, day income and day rate, the transaction is made on the foundation attendance. Wages are compensated to the employees promptly base regardless of the huge of development, at a specified wage rate. The wage rate may be set on hourly, daily, weekly, fortnightly, or monthly base. Computation of income under this1 technique of wage transaction takes into account: (i) time invested by the personnel and, (ii) the wage rate per device of your energy and energy set.
The formula is:
Wages = Time invested x Salary rate per device of time
For example, if personnel get Rs.10 hourly, he works for 8 time per day and has been present for duty on 25 days during the 30 days, his income for the 30 days on the foundation your energy and energy rate system will be:
(25 x 8) time x Rs.10 = Rs. 2,000
Thus the personnel is compensated on the foundation your energy and energy and not on his efficiency or variety of outcome.
Important benefits of this technique are the following:
(i) Simplicity - It is easy to understand and operate.
(ii) Economy - It is economical. Records of manual work are easy and less detailed. This means a saving in running costs.
(iii) Quality outcome - It outcomes in better excellent of outcome aim craftsmanship since employees are in no hurry to complete the jobs.
(iv) Provides set lowest wage - It provides a set lowest waggle the employees for a defined time period. They are assured of s earnings in spite of perform stoppages or due to below par efficiency containers by personal factors.
(v) Elimination of boosting - Speeding is removed as the security of lowest wage is assured to the employees. Speeding would have result sick of the employees and waste of raw materials.
(vi) Equal rights and oneness among employees - It is generally recommended trade unions because consistent rate of wage is given to employees regardless of efficiency. It preserves oneness among employees.
Although time rate product is a common system of wage transaction and widely applied, yet it has the following disadvantages:
(i) Unjust - As the income are compensated on the foundation your energy and energy despite efficiency of the employees, there is no connection between the results an wage of a personnel. The more effective personnel get no extra reward master his efficiency. The income of a beginner and innovative and experience personnel may be the same.
(ii) Unhappiness and Income - It may cause unhappiness among the effective employees and they may leave the organization resulting labor turnover.
(iii) Reduction of efficiency - Efficient employees may become ineffective because they notice that the ineffective employees also get the same income.
(iv) Improved price of development - The price of development per device is higher; there are direct rewards to employees to perform slowly which ultimately outcomes in doing the imperfect perform during extra time and extra time income are compensated at greater rate. Workers also get income for lazy time which helps to improve the price of development per device.
(v) Problems in preparing estimates - It is not possible to ascertain the exact manual work price per device because it will change if outcome falls or increases. So difficulty is experienced in sending the estimates for tenders.
(vi) Issue - It may cause conflict between the control and employees since control wants highest possible outcome and employees want highest possible income. Such conflict may lead to serious conflict between control and employees.
(vii) Improved price of guidance the system needs near guidance to ensure a continual of functions which outcomes in increased price of guidance.