Gantt Task Bonus Plan: Definition; Formula; Applicability; Examples; Advantages And Disadvantages

1.1 Definition:

Gantt Task Bonus Plan is a wage incentive method of rewarding the employees who outperform the expected set output by the organization. In this case, high task efficiency is maintained by providing a bonus expressed in percentage form as a recompense for producing extra above the set standard output.

Gantt Task Bonus Plan sets a standard time as a benchmark against completion of a task based on a careful time and motion study. The employee’s actual performance is compared against the standard time to determine his efficiency and make the payments as supposedly.

The proponent of this payment model was Henry L. Gantt and he postulated that workers to be given a bonus if they complete the task before the set timeframe. Therefore, workers are guaranteed wages as per the determined time. In other words, the quantity of production to be done by the group is decided. Where by the amount of bonus is generally a percentage of the wages paid to the worker.

1.2 Formula for Gantt Task Bonus Plan or Method

So, how is the total wage income under Gantt Task Bonus Plan computed?

The schedule is as shown below

1.3 Applicability of Gant Task Bonus Plan

  1. Gantt Task Bonus Plan is applicable especially where output is affiliated to an individual employee and not a group.
  2. Gantt Task Bonus Plan works well where the employer has set a standard time for every task within the timeframe given.
  3. Gantt Task Bonus Plan is suitable where the employer has set a minimum time wage as guaranteed to all workers to avoid the risk of missing an income.

1.4 Advantages of using Gantt Task Bonus Plan to Compute Labor Cost

  1. Gantt Task Bonus Plan is less punitive as compared to Taylor’s differential piece rate is. Therefore, it is more acceptable by the workers.
  2. Gantt Task Bonus Plan is simplified. So, all stakeholders can follow the computational logistics thereof.
  3. Gantt Task Bonus Plan has a characteristic of wage or income assurance to all employees who is below average workers.
  4. Gantt Task Bonus Plan fairly differentiates the efficient and inefficient workers in a manner such that even the less performing is not pained much as it is in the case of Taylor’s differential piece rate is.
  5. Gantt Task Bonus Plan aids in further decrease of the fixed cost per unit due to increase in production associated with the incentive given.
  6. Gantt Task Bonus Plan promotes efficiency for wages increase progressively with increase in efficiency. As a result, the firm enjoys optimal resource utilization for there is minimal wastage.

1.5 Disadvantages of using Gantt Task Bonus Plan to Compute Labor Cost

  1. Element of worker discrimination.

    Gantt Task Bonus Plan is characterized by discrimination element amongst the employees. This causes demoralization to some of the employees especially those who know that their productivity level is due to unavoidable factors such as domestic challenges.

  2. Creates disunity amongst employees

     Gantt Task Bonus Plan leads to lack of cooperation amongst employees. Hence no team spirit and this results to a decline in output.

  3. No guaranteed efficiency although Gantt Task Bonus Plan has a guaranteed time wage.

    Gantt Task Bonus Plan has set a guarantee plans to ensure that each employee goes home with a salary perk. However, this is not directly associated with an increased work efficiency. 

About the Author - Dr Geoffrey Mbuva(PhD-Finance) is a lecturer of Finance and Accountancy at Kenyatta University, Kenya. He is an enthusiast of teaching and making accounting & research tutorials for his readers.