Our civilization is called a "consumer society", and if there is a buyer on one side of the scale, then the seller on the other. In a situation where the market for goods and services is crowded, as we can see today, for the business owner the main issue is not “how to produce”, but “how to sell”. Of course, advertising and various marketing tricks help in this, but much depends on the correct motivation of the seller.
Soviet past
Once sellers received a fixed salary, and that was fine with everyone. But this type of calculation is effective only in a situation where there is a certain deficit in the market, and buyers simply have no choice. Now at every step we see shops whose shelves are bursting with goods, and numerous companies that provide any, even the most exotic services, so the seller must be competent and active so that the buyer does not go to the neighbors. Of course, it requires staff training and the creation of a positive employer reputation, but motivation is in the first place. Therefore, the Soviet fixed rates were replaced by piecework wages, in which the staff receives as much as they really earned.
Interest on sales
So, economic development requires new approaches to payroll. Let's look at what constitutes piecework progressive wages. Piece-rate - this means the payment depends on the "transaction", that is, on the volume of sales or production. Progressive - the higher the revenue, the higher the payment for each unit. Let's look at an example.
Piecework pay:
Say a clothing seller receives 10% of revenue. Then:
- Sales of 300 thousand rubles. = 30 thousand salary.
- Sales of 500 thousand rubles. = 50 thousand salary.
Piecework progressive wages: the percentage of payroll increases with revenue growth. For example, for an additional 100 thousand 5% is added, for 200 thousand over the norm - 6%, etc.
- Sales of 300 thousand rubles. = 30 thousand salary.
- Sales of 500 thousand rubles. = 62 thousand rubles.
Let's complicate the task
There is a more complex (and interesting) piecework-progressive form of remuneration. At the same time, the increased percentage is calculated not only from additional revenue, but also from the main one. That is: we take all the same rate of 10% and a premium of 2, 3, 4%, etc. for each additional 100 thousand, but this premium will already work for the whole amount:
- Sales of 300 thousand rubles. = 30 thousand salary (10%).
- Sales of 400 thousand rubles. = 48 thousand salary (12% of the total amount).
- Sales of 500 thousand rubles. = 65 thousand salary (13% of the total amount);
Of course, it will not be easy to calculate piecework-progressive wages at a large enterprise, and this is the main reason why such a scheme is used mainly in sales of goods and services. Below we will consider a formula that can be used in a manufacturing enterprise.
Why is it necessary
It would seem that ordinary piecework payment also works well. So what is piecework progressive pay better? Of course, motivation! If the employer pays a fixed rate, there is a great risk that the employee will not try hard: he knows for sure that he will receive the same amount in any case. With a simple piece-rate salary, motivation already arises, but numerous observations of personnel in various fields have shown that many employees set the bar for themselves (“well, I have worked for 30 thousand, you can relax”). But piecework-progressive wages constantly motivate to work more and more, because by putting the same effort, you can get not 50, but 60 thousand. Especially if the option is used when the growing coefficient is applied to all revenue (or generation), and not just to the amount in excess of the norm. In this case, the feeling is created that, without completing the additional output, the employee seems to be losing part of the salary that he could receive.
Underwater rocks
Despite the fact that the piecework-progressive wage system has worked well, it is not used so often. The main reason for this is the reluctance of many managers to change something. It is really not so easy to introduce a new system, for this we need to carry out a number of actions:
- Monitor the enterprise to make sure that a halt in development is associated with a lack of motivation among employees.
- To calculate the raising factors so that they are palpable enough for the workers and at the same time do not exceed the allowable consumption rates for the employer.
- Explain to the employees the new payment system, show its goals and benefits.
- Make sure that accounting knows how to calculate piecework-progressive pay.
The first two points are very important, since a situation is possible when the problems lie not at all in the absence of motivation, but in the lack of professionalism of sellers or the shortcomings of products / services. In addition, it is sometimes easier and more beneficial to hire an additional employee, instead of raising salaries for everyone. New staff often themselves become good motivation, as competition increases (moreover, there are suspicions that layoffs are coming).
Fields of application
Above, we examined examples of the use of piecework-progressive wages only in sales. This is no coincidence, since in other areas of the economy this type of calculation is more difficult to apply for several reasons:
- A significant increase in the volume of settlements: if in sales today managers most often fill out preliminary calculations themselves, and departments usually have a relatively small number, then in production accounting has to fully calculate the salary for a large number of employees.
- The volume of production depends on the capabilities of the equipment, the supply of raw materials and the time required to produce a unit of production.
- The risk of increased marriage.
- The risk that the employee will be idle due to breakdowns or other circumstances beyond his control and will not be able to work out an increased rate.
- With the growth of production, variable costs also rise.
Nevertheless, piece-wage progressive wages are applied both at manufacturing enterprises and in agriculture, although often not quite in the same form as in sales, and not so often.
Types of calculation
Piecework-progressive remuneration may take several forms that are used to simplify calculations or reduce risks:
- Bonus: for additional production or revenue, the employee receives a bonus, the size of which is higher, the greater the excess of the norm. This method is simpler, since the amount of the bonus is clearly prescribed in the documents in advance and does not require additional calculations.
- Piece-time: used in those industries where there is a high risk of downtime. Here, the salary is conditionally divided into three parts: the main piecework + progressive (subject to exceeding the norm) + time-based payments for those periods when the employee was not able to fulfill his duties for reasons beyond his control.
- Indirect: A great option for payroll to employees of auxiliary departments (for example, a repair team) or management. Their payments will directly depend on the amounts that will be accrued to the main production. In this way, repairmen will be interested in having as few breakdowns as possible.
- Chord: used for teams that perform one-off jobs: construction or harvesting. If the work is completed ahead of schedule or in excess of the amount, the employer writes out a bonus for the whole team, and then this bonus is distributed among the employees depending on the contribution of each of them.
Accurate calculation
Since in each case different principles can be applied by which piecework-progressive wages are calculated, the calculation formula will also be different each time. In large industries, where an indicator such as standard hours is introduced, the following formula is often used:
RFP (total) = RFP (sd) + (RFP (sd) x (Pf - Mon) x K) / Pf, where:
- RFP (total) - final salary;
- ZP (sd) - payment at the basic rate for the entire output;
- Pf - actual production;
- PB - regulatory production;
- K is a progressive coefficient.
Approval in documents
In general, piece-wise progressive wages provide for wages, the growth of which directly depends on exceeding the established norm of work efficiency, but the norm, as well as the form of calculation, can be different. Therefore, each company makes its own decision on the principles of accrual of payments, increasing ratios, bonuses and more. If you decide to introduce a piece-wage progressive salary, then you need to:
- Develop a whole system of norms.
- Describe in detail the accrual system in the Regulation on remuneration and in labor agreements with employees.
- Provide such working conditions under which the staff will not stand idle through no fault of their own.
- Establish a quality control system so that the percentage of rejects does not increase in the pursuit of quantity or sellers do not begin to apply incorrect sales methods.
