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Costing and Taxation · Ch 4 — Methods of Remuneration – II (Halsey & Rowan)

Rowan Premium Bonus Scheme

4.B

Rowan Premium Bonus Scheme

The Rowan Premium Bonus Scheme, devised by David Rowan, keeps the same guaranteed-wage foundation as Halsey — a worker is always paid at least Time Taken × Time Rate — but changes how the bonus itself is calculated. Instead of a fixed percentage of time saved, Rowan makes the bonus depend on the RATIO of time saved to time allowed, giving it a genuinely different, self-limiting shape.

Note

Rowan Premium Bonus Scheme — formula

Bonus = (Time Saved ÷ Time Allowed) × Time Taken × Time Rate.

Total Earnings = (Time Taken × Time Rate) + Bonus.

(Time Saved is computed exactly as under Halsey: Time Allowed − Time Taken, taken as Nil whenever Time Taken equals or exceeds Time Allowed.)

The self-limiting property of Rowan

Because the Rowan bonus formula multiplies Time Taken by the FRACTION of time saved (rather than the full time saved, as Halsey does), the bonus does not simply keep climbing forever as a worker saves more and more time. Working through the formula with a fixed Time Allowed and Time Rate but progressively smaller values of Time Taken shows that the Rowan bonus rises to a maximum exactly when Time Taken equals half of Time Allowed (i.e., when 50% of the allowed time has been saved) — and if the worker saves even more time beyond that point, the Rowan bonus actually starts to FALL, even though the worker is finishing the job faster still (Question 9 of the Illustrations below works through this numerically). This built-in ceiling is a deliberate safety feature: it discourages a worker from rushing carelessly merely to save more time, and it protects the employer if the Time Allowed itself turns out to have been fixed too loosely, since an abnormally large time-saving is automatically rewarded LESS generously, not more.

Advantages of the Rowan Scheme

  • Self-limiting bonus protects against a loosely-set Time Allowed, as explained above — an accidentally over-generous standard does not translate into an unlimited bonus.
  • A worker still earns some bonus for any time saved at all, encouraging genuine, steady efficiency rather than an all-or-nothing outcome.
  • Tends to discourage rushed, careless work at very high time-saving levels, since the marginal bonus for saving still more time actually shrinks.

Limitations of the Rowan Scheme …

Definition 1Rowan Premium Bonus Scheme

A wage system guaranteeing Time Taken × Time Rate as basic wages, plus a bonus equal to (Time Saved ÷ Time Allowed) × Time Taken × Time Rate — a bonus that rises to a maximum when Time Taken equals half of Time Allowed, …