Hour to Hour or 100% Bonus Plan

Introduction to The hour-to hour or 100% bonus plan

Within this plan, 100% of the time saved is paid to worker like bonus. It is dissimilar form piece-rate system since here the standard time per unit of output is fixed than a standard rate per unit of output. The calculating the earnings' formula can be displayed as follows:

Total Earnings = Time taken × Hourly Rate + Time Saved × Hourly Rate

Example

Standard time per piece = 1 hour

No. of pieces completed = 10

Actual time taken = 6 hours

Hourly Rate = Rs. 2 per hour

Earnings = 6 × Rs. 2 + (10 - 6) × Rs. 2

= Rs. 12 + Rs. 8 = Rs. 20.

If a worker done only 5 pieces then also he shall obtain the wages for 6 hours of work at the rate of Rs. 2 per hour. So, actually, it is a piece work system combined along with a minimum wage at the time-rate system. The total pay is precisely similar as under piece-rate system if the worker achieves the standard speed that is he begins completing one piece in one hour.

The system is considered most appropriate from the point of view of justice and equity. From the costing opinion, the unit cost shall be constant, once the standard speed is achieved through a worker. The system is different from Halsey plan because here bonus is paid at 100% of time saved in its place of 50% (or 30% Halsey-Weir Plan) of time saved within Halsey plan.

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