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Emerson Efficiency Plan

This scheme combines minimum day wages and the differential rate. Emerson, one of Taylor’s associates, was the propounder of this scheme. Under this plan, a standard task for a unit of time or standard time for a job is set up first, and then the level of worker’s efficiency is determined on that basis. If a worker can finish the task in the allotted time, he is regarded as 100% efficient – one of 66% efficiency and another of 150% efficient. The bonus is paid to a worker at a nominal rate if he just attains the level of 66% efficiency. The bonus increases in a given ratio as the output increases from 66% of standard output and beyond the level of 100% efficiency.

Different rates are applicable at different levels of efficiency. Emerson used 32 differentials so that each and every worker tries to work harder at every stage and earns more and more by increased bonus rate. The increase in rate is gradual and thus the transition is effected from day rate to piece rate as and when there is better performance of workers. The workers who cannot attain 66% level of efficiency are paid at the time rate. Beyond that, the graded scale of bonus starts and at 80% efficiency, the amount of bonus is 4% efficiency; it increases to 20% of the wages earned. If the worker is more than 100% efficient, he will receive wages for the time taken plus 20% of wages so earned and plus wages for time saved.