Halsey Premium Bonus Scheme

Concept of Labour and Methods of Remuneration – I covered the simplest wage systems — Time Rate, Straight Piece Wages, and the Differential Piece Wage schemes of Taylor and Merrick. Every one of those systems rewards a worker either purely for TIME spent (Time Rate) or purely for OUTPUT produced (Piece Wage systems). A Premium Bonus Scheme takes a hybrid approach: it guarantees the worker a wage for the time actually taken to do a job (exactly like Time Rate), and on top of that guaranteed wage, pays an extra bonus whenever the worker finishes the job in less time than a standard Time Allowed for it — so both the employer (who gets the job done sooner) and the worker (who earns more for the same job, in less time) share in the benefit of the time saved.

WBCHSE's Costing and Taxation syllabus tests two Premium Bonus Schemes at this level — Halsey and Rowan — both built from the same three ingredients: Time Allowed (the standard time fixed, usually by a time-and-motion study, for completing a specified piece of work), Time Taken (the time the worker actually takes), and Time Rate (the wage rate per hour). This section covers the Halsey Premium Bonus Scheme, devised by F. A. Halsey; Section 4.B covers Rowan.

Halsey Premium Bonus Scheme — concept

Under the Halsey scheme, a worker who completes a job in less than the Time Allowed is paid:

• Basic Wages = Time Taken × Time Rate (exactly as under plain Time Rate — the worker is never worse off under the scheme; if no time is saved, wages simply equal Time Rate pay), plus
• Bonus = a fixed percentage — conventionally 50% — of the money value of the time saved.

The 50% sharing ratio is the most commonly adopted convention in cost-accounting practice and textbooks (some organisations use a different ratio, such as one-third, in which case the scheme is simply described using that stated percentage instead of 50%) — a problem always states the percentage to use, and 50% should be assumed only where a problem does not state otherwise.

Advantages of the Halsey Scheme

• Simple to understand and calculate — both worker and employer can verify the bonus with one straightforward formula.
• Guarantees a minimum wage: even a worker who saves no time at all (or takes longer than the Time Allowed) still earns the full Time Rate wage for the time actually taken — the scheme can never reduce a worker's pay below plain time-rate earnings.
• Benefit of efficiency is shared: because only 50% of the value of time saved is paid as bonus, the other 50% accrues to the employer as a genuine cost saving — an incentive structure both sides find acceptable.

Limitations of the Halsey Scheme

• The fixed 50% share does not reward exceptionally efficient workers any more generously, proportionally, than moderately efficient ones — the bonus simply keeps rising in a straight line with every additional unit of time saved, however large the saving.
• If the Time Allowed has been set too loosely, a worker can earn a very large bonus for relatively little extra effort — Halsey has no in-built mechanism (unlike Rowan, Section 4.B) to automatically dampen the bonus for suspiciously large time-savings.

WBCHSE's Costing and Taxation syllabus tests these incentive-wage schemes on the same labour-cost and cost-control principles that CBSE/NCERT Accountancy and cost-accounting courses build on elsewhere in India — only the specific numbers in a problem differ from textbook to textbook, never the underlying formula.