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Justify the following statement. A differential piece wage rate plan is necessary.

Justify the following statement.

A differential piece wage rate plan is necessary.


Solution: 


(1) According to F. W. Taylor, the differential piece wage rate plan is necessary to motivate the employees to attain higher standard performance and to earn remuneration at a higher rate. Differential piece wage rate plan suggests that remuneration should be fixed and paid in such a way that average worker is motivated to attain standard output.


(2) In the differential piece wage rate plan, the standard is determined for production by the management. The workers who produce more than the standard are to be paid more in the form of incentives and those who produce less than the standard are to be paid less by way of penalty. This technique encourages those who perform well and motivates those who have performed less than the standard required to improve their performance.


(3) Taylor suggested the differential piece wage system and further stated that the discrimination should be made between the efficient and inefficient workers. This technique explains that efficient workers should be paid more remuneration in comparison to inefficient workers.


(4) Thus, the differential piece-rate wage plan technique motivates the able employees to attain higher performance and earn wages at a higher rate.


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