Beruflich Dokumente
Kultur Dokumente
Case Study Of Visakhapatnam Steel Plant On Motivating Employees through Incentive Scheme
Learning & Sharing by Sandeep Deshpande
Article Published in Journal of NIPM, Jan Mar 05 issue contributed by Mr. Panchanan Chaudhuri Executive Director (HRM), Rashtriya Ispat Nigam Ltd., Visakhapatnam Steel Plant.
Introduction
Visakhapatnam Steel Plant (VSP) was reported to BIFR as a potentially sick company in the year 2000 with more than 50% of its capital eroded through accumulated losses. It made a turnaround in 2002-03 by registering a net profit of Rs. 521 Crs. Now, a debt free EVA positive company is all set for expanding its capacity from 3 Million Tonne Liquid Steel per annum to 10 Million Tonne Liquid Steel per annum in two phases. All the production shops are operating at 120% to 125% above the rated capacity. One of the major contributing factors towards turnaround of VSP is its IS. In this presentation you will find the, conceptual aspects of formulating an IS & its operational aspects with reference to VSP. The purpose of IS is to motivate employees to higher levels of performance based on the following. Employee can improve his level of performance by 1/3rd more output than his normal level, if suitably motivated. Employee can be motivated through Financial Incentive or Non Financial Incentive like; recognition, job satisfaction, a good working environment etc. However, it is widely observed that monetary inducements bring forth that extra effort from an employee, especially in the lower & middle levels of an organisation.
Any discussion on incentive schemes involves the following. a) Concept b) Formulation c) Implementation
d) Administration.
Concept
Considering Incentive as a component of Wage. Analysing incentive scheme as a motivator for higher performance. Viewing incentive as an approach to productivity bargaining.
Formulation
The following points are considered during the formulation of an incentive scheme :
Lower cut-off point / threshold level. The incentive curve. The differential of payment. Type of Scheme Coverage Management of Transition Settlement Period.
Incentive payment neither made at very low level of capacity utilisation nor be too high and beyond the reach of workmen. Decision about THRESHOLD LEVEL demand a pragmatic approach.
Incentive Curve
Ideally, the incentive curve should be of concave nature. It means that there should be accelerated rate of incentive payment at higher and higher levels of performance. This is because the degree of difficulty involved in improving performance by say, same one percent is more and more as the level of performance is higher and higher
Type of Scheme
Based on Specific need of the organisation. Based on individual performance are adopted with the individual performance as the unit of reference. If the nature of work is interdependent, group schemes are adopted. Plant or Enterprise scheme are required for cost reduction, effective management of resources, reducing manpower, developing better work methods, etc., Present tendency is to mix of the different approaches by relating part of the payment on volume and a part on techno-economic performance with an overall linkage to productivity. Other factors may also linked to the incentive scheme but SIMPLICITY should be the essence of any scheme.
Coverage
Previously one man one machine ratio. Now, due to advance technology we have to consider broad functions viz, operation, maintenance, services etc., are integrated into the PBR system. Differential ought to be maintained between the direct & indirect employees & also within the direct employee. More benefit to be given for harder, hotter & more hazardous working to keep them motivated to work in disagreeable working conditions.
Management of Transition
Management of Transition depend on careful study of the environmental variables besides other attendant factors in the organisation. It is very complex in nature & will be depend on assessment & observation.
Settlement Period
Payment of Incentive could be a month, a fortnight or a week. Short period may not provide sufficient time to consolidate on the production trend. Long period may lose its motivating quality. Generally in many industry period of settlement is a month.
Implementation
Crucial & most important aspect of any Incentive Scheme. Most situations, union interaction becomes a compulsion. Finalization of Departmental performance parameters. (Discussion on Peculiar Issues) It is advisable to involve as many employees as possible in the interaction process for smooth implementation of the scheme
Administration
A detailed procedure is to be drawn up for administering the scheme. Responsibility centres are fixed for feeding of information on performance levels, safety/Accident records and any other relevant factors required for calculation of incentive earnings. These centres would be the PP, IE, Finance & Systems departments. Simple formats are to be designed so that uniform and accurate data is received from the various departments.
Other Tools
Display boards placed at strategic locations on the shop floor.
Information of Target achieved & incentive earned.
Incentive schemes are designed for specific periods. Reassessment could be done
Is there any stability in the earnings. Is scheme serves the purpose of providing motivating for higher level of performance.
Panacea Syndrome
Incentive Schemes should not be considered as a panacea for all the problems in an organisation. Designed incentive scheme may not serve its purpose if other factors like; effective supervision, prevalence of conducive I R climate, efficient management of inputs etc. are not adequately take care of. IS should be viewed only as an important input in the overall context of management.
The potential, i.e. maximum earning at 100% performance level is given below.
Grades / Levels
S1 S2 S3 S5 S6 S8 S9
Total (Rs.)
688 1038 1575 1663
E1 E2
E3 E6
1243
1313
532
562
1775
1875
80
100 125
64
100 145
There is a steep increase in incentive earnings beyond 100% of DPR capacity by using a money multiplier in volume component of earnings.
TEF factor
There are three techno-economic factors for each department. The monthly earnings will be derived by adding earnings from the production and TEF components. The earnings of an individual will be calculated by multiplying the total amount (gross incentive) by three factors as given below:
Incentive eligibility factor for the department. (A) Attendance factor of an individual employee. (B) No Fire factor. (C)
The INCENTIVE ELIGIBILITY factors for employees of the different departments are as given below : Department Eligibility
1.2 1.0
Attendance Factor
To encourage good attendance, the following factors are given depending on actual attendance of an individual in a calendar month
No. of Days Attendance 24 days and above 19-23 days Factor 1.0 0.8
16-18 days
Below 16 days
0.6
0.0
Other Schemes
An amount of Rs. 75/- is paid as incentive to each employee if there is no reportable accident in the department in a calendar month. In case of fatal accident in the department in the calendar month, the earnings from the safety factor will be nil. In addition, each employee will have to contribute Rs. 75/- from his/her incentive earnings of that month. The money thus collected will be handed over to the bereaved family.