Question

What are the pros and cons of switching from wage rates to piece rate pay?

Are Safelite installers good candidates for piece-rate pay? Why or why not?

Answer 1

Solution:

Piece rate pay is the type of pay that depends only on the output and not on the time required to produce the output. This type of wage system fits perfectly for some businesses and it has its own pros and cons.

Piece wage system has pros such as listed below,

• There is increased production because of the piece wage system that motivates the workers to produce more.
• Wages are directly linked to the efforts made by the worker, making it a fair system of wage management.
• The operations are efficient and effective.
• There is little supervision required because of the piece wage system where workers ger paid for the visible work they do.

Some of the cons of piece wage system are listed as below,

• The quality of production goes down because workers are more focused on increasing production to increase pay.
• There is no guarantee of minimum wages.
• There can be effects on health where workers may work ignoring their health to earn their wages.

These are some of the cons of the piece wage system.

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Satelite installers have a job that requires significant amount of time and efforts to install one single satelite and hence just looking at the output of this process for decising the wages will be a bad idea given the nature of work involved. This is why the piece wage system will not be appropriate for satellite installers and it shouldbe avoided for any business involving in activities where it is not appropriate to use piece wage system.