Written by The Halsey scheme, Halsey-weir scheme, and Rowan scheme are three of the most popular premium bonus schemes used in the corporate world today.
In a premium bonus scheme, a standard time is fixed for the completion of work.
Workers are then paid for time taken to complete the job and the fraction of time saved on standard time through the bonus.
So, the bonus paid to workers in premium bonus schemes is computed on the basis of savings in the difference between the time allowed and the time taken.
Premium bonus schemes are done to encourage efficiency in the workplace
There are many premium bonus schemes, but, for the purpose of the title, we will be looking at just 3 premium bonus schemes, which are the Halsey scheme, the Halsey-weir scheme and the Rowan scheme.
Halsey Scheme
The Halsey Bonus Scheme was invented by an American engineer and efficiency expert F.A Halsey, in the early 1900s.
Under the Halsey Scheme, workers are paid a bonus on the basis of time saved.
Standard time is fixed for a job and if the actual time taken is less than the standard time, the worker becomes eligible for a bonus equal to 50% of the time saved.
The formula for calculating total wages under the Halsey Scheme is as follows:
Total wages=(Time taken × Hourly rate) +\(\frac{1}{2}\) × (Time allowed-Time taken) ×Hourly rate
Example
Calculate the total wages of a worker who can complete a job with a standard time of 8 hours in just 6 hours while being paid N10 per hour under the Halsey Bonus Scheme.
Solution:
Total wages=(Time taken × Hourly rate) +\((\frac{1}{2})\)× (Time allowed-Time taken) ×Hourly rate
Total wages=(6 × 10)+\(\frac{1}{2}\)×(8-6) ×10
Total wages=\(60+\frac{1}{2} \times 20\)
Total wages=N70
Halsey-weir Scheme
In the Halsey Premium Plan, an employee is paid a bonus of 50% for the time saved plus the wage for the actual time spent on the job.
However, in a Halsey-Weir Plan, an employee is paid a bonus of 33.3% of the time saved plus the wages for the actual time spent on the job.
This means the worker is paid a third of the time saved.
Mathematically, it is expressed as:
Total wages=(Time taken × Hourly rate) +\(\frac{1}{3}\) × (Time allowed-Time taken) ×Hourly rate
Example
Calculate the total wages of a worker who can complete a job with a standard time of 8 hours in just 6 hours while being paid N10 per hour under the Halsey-weir Bonus Scheme.
Solution:
Total wages=(Time taken × Hourly rate) +\(\frac{1}{3}\) × (Time allowed-Time taken) ×Hourly rate
Total wages= \((6 × 10)+ \frac{1}{3} \times (8-6) × 10\)
Totaal wages=N66.67
Rowan Bonus scheme
The Rowan bonus scheme, named after its creator Mr James Rowan, is a type of bonus plan that focuses on rewarding workers for their efficiency and time-saving efforts.
In the Rowan Plan, the time saved by workers is expressed as a percentage of the time allowed for completing a task, and the hourly rate of pay is increased by that percentage so that the total earnings of the worker are the total number of hours multiplied by the increased hourly wages.
The plan aims at ensuring the permanence of the premium rate, which is often cut by the employer when the worker’s efficiency increase beyond a certain limit.
Total wages=\(\text{(Time taken × Hourly rate)} + \frac{\text{Time used}}{\text{Time allowed}} × \text{(Time allowed-Time taken)} ×\text{Hourly rate}\)
Example
If 8 hours is the standard time for doing a job and N40 is the daily wage. Calculate the total wages of a worker who is able to complete the job in 5 hours.
Solution
Total wages=\((5 × 40) + \frac{5}{8} × (8-5) ×40\)
Total wages= \(200 + \frac{5}{8} × 120 = N275\)
Having looked at each Premium bonus scheme, let us now take general examples
General Example
A worker in a factory is expected to produce 120 units of product in an 8-hour working day for which he is paid N90 per hour.
If at the end of a 9-hour working day, he produces 150 units. Calculate his Gross pay under the:
1. Halsey bonus scheme
2. Halsey-weir bonus scheme
3. Rowan bonus scheme
Solution
120 units in 8 hours mean that the worker is expected to produce 15 units per hour.
This means that in 9 hours, the worker is expected to produce 135 units of the product.
The time allowed for 150 units is 10 hours since he is expected to produce 15 units in 1 hour.
But, the worker took just 9 hours to produce 150 units. The time saved is, therefore, 1 hour.
Since the worker produces 150 units, instead of 135 units in 9 hours, he is entitled to a bonus.
1. In Halsey’s bonus scheme, Total wages are calculated as:
(Time taken × Hourly rate) +\(\frac{1}{2}\) × (Time allowed-Time taken) ×Hourly rate
Total wages=(9 × 90)+\(\frac{1}{2}\) × (10-9) ×90=N810
2. In the Halsey-weir bonus scheme, Total wages are calculated as follows:
Total wages=(Time taken × Hourly rate) +\(\frac{1}{3}\) × (Time allowed-Time taken) ×Hourly rate
Total wages=(9 × 90)+\(\frac{1}{3}\) × (10-9) ×90=N840.
3. In Rowan scheme, Total wages are calculated as follows:
Total wages=\(\text{(Time taken × Hourly rate)} + \frac{\text{Time used}}{\text{Time allowed}} × \text{(Time allowed-Time taken)} ×\text{Hourly rate}\)
Total wages =(9 × 90)+ \(\frac{9}{10}\) × (10-9) × 90 = N891.
