Read this article to learn about the Halsey premium plan, its formula, calculation, advantages and disadvantages.
Under Halsey premium plan method, standard time for doing each job or operation is fixed and the worker is given wages for the actual time he takes to complete the job or operation at the agreed rate per hour plus a bonus equal to (usually) one-half of the wages of the time saved. In practice, the bonus may vary from 33½ % to 66½ % of the wages of the time saved.
If there is no saving in the standard time allowance, the worker is paid only his day rate.
Thus, if S is standard time, T the time taken, R the labour rate per hour, and % the percentage of the wages of time saved to be given as bonus, total earnings of the worker will be:
1. It is simple to understand and relatively simple to operate.
2. It guarantees time wages to workers.
3. The wages of time saved are shared by both employers and workers, so it is helpful in reducing labour cost per unit.
4. It makes distinction between efficient and inefficient workers because it provides increasing incentive to efficient workers.
5. Fixed overhead cost per unit is reduced with increase in production.
6. The employer is able to reduce cost of production by having reduction in labour cost and fixed overhead cost per unit. Lower cost gives him incentive to provide the best possible equipment’s and working conditions.
1. Quality of the work suffers because workers are in a hurry to save more and more time to get more and more bonus.
2. Workers criticise this method on the ground that the employer gets a share of wages of the time saved.
3. Difficulties are experienced in determining standard time and hourly rate of wages which may be acceptable to workers.
