A Business Encyclopedia

Barth Variable Sharing Plan

Definition: Barth Variable Sharing Plan is yet another incentive scheme in which the time-rate is not guaranteed and the earnings of the worker are ascertained by taking the square root of the standard hour multiplied by the number of hours actually taken for the completion of the job and then multiplying it by the worker’s rate per hour.

In other words, an incentive plan under which the earnings are calculated by multiplying the worker’s hourly rate by the geometric mean of the standard hours and the hours actually taken is called as Barth Variable Sharing Plan. Numerically, it can be expressed as:

Unlike Halsey and Rowan plans, the Barth variable sharing plan does not guarantee the time-rate. This means a worker is not paid for the hours worked more than the standard hours. This scheme can be further understood through examples given below:

Standard Time = 8 hrs
Rate per Hour = Rs 2

Case (1): Time Taken = 10 hrs

= 8.94 X 2 = Rs 17.88

Case (2): Time Taken: 8 hrs

= 8 X 2 = Rs 16

Case (3): Time Taken: 6 hrs

= 6.92 X 2 = Rs 13.84

Thus, the worker will earn Rs 13.84, in case he works for less than standard hours, i.e., 6 hrs.

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