Incentive Plans — Rowan Premium Plan

Rowan Premium Plan

Devised by James Rowan, the Rowan Premium Plan also guarantees a time wage plus a bonus for time saved, but computes the bonus differently from the Halsey Plan. Instead of a fixed percentage of the time saved, the bonus is the proportion that the time saved bears to the time allowed, applied to the basic time wage.

• Time Saved = Time Allowed − Time Taken
• Basic (Time) Wages = Time Taken × Rate per Hour
• Bonus = (Time Saved ÷ Time Allowed) × Time Taken × Rate per Hour
• Total Earnings = (Time Taken × Rate) + [(Time Saved ÷ Time Allowed) × Time Taken × Rate]

In words: the bonus rate under Rowan automatically rises and falls with the proportion of time saved. A special feature is a built-in safeguard against over-speeding — the bonus is maximised when the time saved is exactly half of the time allowed; beyond that the bonus proportion falls, so a worker cannot keep increasing earnings simply by rushing dangerously. This automatically discourages the rushing (and quality loss) that a straight piece-rate or a very high fixed bonus can encourage.

Advantages: guarantees a time wage (security); rewards time saved; the proportional bonus protects against reckless over-speeding and so protects quality; the worker cannot be over-rewarded when time saved is very large.

Limitations: the formula is harder for a worker to compute and understand than Halsey's; for a MODERATE time saving the worker may actually earn MORE under Rowan than under Halsey, but for a LARGE time saving the worker earns LESS under Rowan than under Halsey — which some efficient workers regard as a disincentive.

Halsey vs Rowan — a quick comparison