Costing and Taxation · Ch 4 — Methods of Remuneration – II (Halsey & Rowan)
Comparing Halsey and Rowan Premium Bonus Schemes
Comparing Halsey and Rowan Premium Bonus Schemes
Halsey and Rowan solve the same problem — rewarding a worker for finishing in less than the Time Allowed, while guaranteeing at least the Time Rate wage — but their formulas produce genuinely different bonus amounts on identical data. Comparing them side by side is one of the most frequently tested skills in this unit.
| Basis of distinction | Halsey Scheme | Rowan Scheme |
|---|---|---|
| Bonus formula | 50% × Time Saved × Time Rate | (Time Saved ÷ Time Allowed) × Time Taken × Time Rate |
| Shape of the bonus as time saved rises | A straight line — bonus keeps rising steadily, in direct proportion to time saved, with no upper check | Rises, reaches a maximum at 50% time saved, then FALLS for any further time saved |
| Protection against a loosely-set Time Allowed | None built in — a very generous standard simply produces a very large bonus | Self-limiting — an abnormally large time-saving is rewarded less generously, not more |
| Ease of calculation | Simpler — a single fixed percentage | More complex — the percentage itself varies with the ratio of time saved to time allowed |
| Devised by | F. A. Halsey | David Rowan |
Where the two schemes agree, and where they cross over
At exactly 50% of Time Allowed saved (i.e., Time Taken = half of Time Allowed), Halsey and Rowan give an IDENTICAL bonus. Below that point (time saved is less than 50% of Time Allowed), Rowan generally gives the LARGER bonus. Above that point (time saved is more than 50% of Time Allowed), Halsey generally gives the LARGER bonus, because Rowan's bonus has already started to decline while Halsey's keeps rising in a straight line. Questions 5, 6 and 9 in the Illustrations below work through this crossover with real figures. …
The point at which Time Taken equals exactly half of Time Allowed. At this point, Halsey and Rowan give an identical bonus; below it Rowan generally pays more, above …