Remuneration and Incentives
Meaning, Difference and Essentials
Cost Accounting Notes B.Com CBCS Pattern
Remuneration Meaning
Incentives Meaning
Difference between Remuneration and Incentive
Basis | Remuneration | Incentives |
1. Nature | Remuneration is fixed. | Incentive is variable. |
2. work | Remuneration is given to labourers, employees for their presheculded task or routine task. | incentive is provided when they perform good in their routine task. |
3. Motivation | It is routine payment. It does not motivate an employee. | Incentive are ways to appreciate the employee’s performance. |
Essntials of an Ideal Incentive Plan
a) Simplicity - The plan should be simple to understand and operate. Who should be able to calculate their wages without any difficulty?
b) Acceptability - It should be acceptable to workers as well as the employer.
c) Flexibility - The incentive plan should be flexible to introduce nice changes.
d) Quality - The plan should ensure the quality of the output. Workers should be discouraged to speed up the work to earn more wages at the cost of quality.
e) Stability - The plan should give a stable earnings over a period of time, minimum but adequate wage must be ensured.
f) Wide coverage - It should cover the maximum number of workers. 1 direct as well as indirect worker should be covered.
g) No restriction on earnings - The plan should not have any restriction earnings of workers. They should be allowed to earn as much as they can.
h) Investigation and evaluation - The plan should be based on scientific investigation and evaluation to produce good result. Standard time should fix on the basis of time and motion study.
i) Increasing output and lowering cost of production - It should aim increasing output and lowering cost of production.
j) Motivating to earn more - The plan should motivate the workers increase their efficiency and earn more.