Some companies pay production workers on piecework incentive systems; that is, t

Question

Some companies pay production workers on piecework incentive systems; that is, the more a worker produces, the more pay is received. Other companies have group incentive systems in which the more processed by an area, the more pay everyone working in that area receives. Still other companies compensate workers for their time; workers receive an hourly wage for each hour at work regardless of the production volume. Discuss the benefits and problems of each of these pay systems for a production area where material movement is governed by a kanban system

Explanation / Answer

In a Kanban system which is actually a relay system, the performance actually depends on the total performance of the group and if one employee underperforms the performance of the group is affected to quite some extent. So if the piece work incentive systems is used then the advantage will be that the worker who is underperforming will be receiving less pay and the high performers will not be affected and they will receive what they deserve but the basic disadvantage is that the employee receiving less pay may lose motivation and may continue performing under the expectation which will affect the total productivity.

The advantage of using group incentive system is that the group is paid an equal amount which is divided equally but here also the high performers may feel that the process is unfair ao we can observe that no system is perfect and even the hourly pay is not because then workers will not have the urge to perform in an outstanding manner and the issue persists in fixed pay work so I believe that it is better to implement pay based on the work and the performance which will make the system transparent and fair.

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