A Business Encyclopedia

Rowan Plan

Definition: Under Rowan Plan, the standard time for the completion of a job and the rate per hour is fixed. If the time taken by the worker is more than the standard time, then he is paid according to the time rate, i.e. time taken multiplied by the rate per hour.

In case, the worker completes the work in less than the standard time; then he is entitled to a bonus along with the time wages. A bonus is the percentage of worker’s time rate. This means, the bonus/premium is calculated on the percentage of wages earned for working on a job and is not calculated for the time-saved, as in the case of Halsey Plan. This percentage is equivalent to the proportion of the time saved to the standard time. Numerically,

Bonus = Time Saved/ Standard Time

The incentive scheme under Rowan Plan can be illustrated by the examples given below:

Standard Time = 8 hrs
Rate per hour = Rs 2

Case (1): Time Taken = 8 hrs
Earnings = 8 x 2 = Rs 16

Case (2): Time Taken = 10 hrs
Earnings = 10 x 2 = Rs 20

Case (3): Time taken = 6 hrs
Time Wages = 6 x 2 = Rs 12
Bonus = 2/8 X 6 = Rs 1.5

Thus, in the above example, the worker completing the work in 6 hrs, less than the standard time, the total earnings will be Rs 13.50 (time wages+bonus).

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