A Business Encyclopedia

Taylor’s Differential Piece-Rate System

Definition: Taylor’s Differential Piece-Rate System was introduced by F.W. Taylor, who believed that the workers should be paid on the basis of their degree of efficiencies. Under this method, with the help of Time and Motion Study, the standard time for the completion of a job is fixed on the basis of which the performance of the workers is evaluated.

Taylor’s differential piece-rate system posits that the worker who exceeds the standard output within the stipulated time must be paid a high rate for high production. On the other hand, the worker is paid a low rate if he fails to reach the level of output within the standard time. Thus, there are two piece-rates, one who reach the standard output or exceeds it, is paid 120 percent of the piece rate. While the one who fails to reach the standard level of output, is paid 80 percent of the piece-rate. The minimum wages of the worker are not guaranteed.

This system can be further understood through the example given below:

Standard Output = 200 units
Rate per unit = Rs 10 paise

Case (1): Output = 220 units
Earnings = 220 x (120/200) x 0.1 = Rs 13.20

Case (2): Output = 180 units

Earnings = 180 x (80/200) x 0.1 = Rs 7.20

It is clear from the above example that the worker is paid a higher rate (Rs 13.20) for high production (220 units) and low rate (Rs 7.20) for low production (180 units). Thus, Taylor’s differential piece rate system works on the principle that the inefficient worker must be paid at a low piece-rate for low production such that he is left with no other option but to leave the organization.

Leave a Reply

Your email address will not be published. Required fields are marked *


Related pages

refresher training meaningdefinition of capital employedstrategies of collective bargainingid ego and superego exampledefine behavioral segmentationkiosk banking meaningdefinition of retrenchmentballoon loan definitionemployees provident funds schememanagement theory of max webersocial loafing examplesbasis of marketing segmentationinvoluntary unemployment definitionindifference curve equilibriumpert definitionsemantic differential rating scalelikert management systemhygiene theory herzbergassets employed formulaherzberg motivation theoriesgordon allport personality definitionexample of vestibule trainingiron laws of wagesclassical conditioning by ivan pavlovtechniques of business forecastingdefinition of planingstaff provident funddivestment meaning in hinditheory of motivation pptunemployment cyclicalwhat does provident meandefinition pure competitionmethods of internal recruitmenteconomic jargonsdefinition of social loafingelasticity of substitutionvie theory of motivationtowne definitionbases of market segmentationwhat is trait theory of personalitytwo way symmetrical modelmiller modiglianimcgregors theory x and ynominal group technique ngtindifference curve and its characteristicsautocratic leadership stylesqueuing definitionmeaning of untappedhuman resource jargonsoligopoly market characteristicsdefine collective barganingfactors influencing consumer behaviour pdfdefine oligopolistic marketarbitrage forexsfa automationmax limit of neftdefinition of systematic sampling in statisticsadvertising elasticityitemized meaningdefinition of teleological ethicssinking fund method of depreciation formulajuhari windowtravelers chequedefine ordinalpure oligopoly definitionmicroenvironment and macro environment in marketingtransactional theory definitioncharacteristics of sole proprietorshipcost push theory of inflationdefine hedging financeoccupied unoccupied signstheory of needs by david mcclellandwhistle blowing meaningbases of segmentation in marketingclassical conditioning easy definitionsnowball definitionturnover ratio calculatorexamples of goods with elastic demand