What Does It Mean When You Get Paid by Production?

Many employees throughout the United States are used to being paid what is referred to as piece rate, but what exactly is it and how does it all work?

What is the piece wage system?

When it comes to the piece rate system as part of employment opportunities, it means that employees are paid per creation, or production, unit. For example, if someone is running a machine that makes a certain part of a garden house, they are making piece rate. If their machine breaks down, they are paid a downtime wage that is not nearly as much as their piece rate. This means they get very angry with maintenance people if they don't come and fix their machine right away because they want to be paid a piece rate as much as possible.

When the piece rate payment system is properly implemented. It does motivate employees to work harder and increase overall productivity. Piece rate has many advantages and disadvantages for the employees as well as their employers.

Another name for piece rate pay is piece work and it is a system the employers can implement that will pay each employee per item that they produce rather than a fixed annual salary or even a certain rate of pay per hour. Employers base the piece rate pay on the amount of work that has been done, so basically, employees earn money that is directly proportional to the number of products and services they produce during the workday.

For employers to be in compliance with minimum wage laws in their state, they must keep a record of each employee's work hours which will then ensure that the employee gets paid at least the amount they would have received if they worked and are paid a certain amount per hour.

What level is an associate?

An array of different businesses refers to their entry-level employees as associates. This is very common at factories when company officials are referring to people who work on production lines and machines to produce products in entry-level positions. This can also be true in other businesses since sales assistants or servers can also be referred to as associates. This word is often used to describe employees so that they understand that they do have value within the company they work for. Associates normally have fewer responsibilities than higher-level employees but are often in a position in which they are working towards a raise or a promotion within the company they work for. Many associate employees are assigned to teams or specific departments within the company that are related to their educational background as well as their skill levels.

Some of the responsibilities of associates working for companies include managing and coordinating jobs between several departments within the company they work for, as well as producing quality products for the company in which they work. For example, an associate and a factory may be producing seats for vehicles that are then shipped to another company to be installed and the corresponding cars, trucks, or SUVs. Associates that work at department stores such as Walmart may be stocking products or checking out customers. Some associates may handle customer complaints and assist customers in finding the products they are looking for while exhibiting respect for the customers. Associates normally work very hard to please their employers so that they will be in line for promotions and pay raises in the future.

The Rowan Plan

Basically, the Rowan Plan is a plan that is put in place that determines the standard time that it should take to complete a specific job and the rate that the employee is paid per hour to do that job is a fixed rate based on the level of work. If an employee takes longer than the standard amount of time there is the average length of time it should take to do a specific job, then he or she is paid according to the time rate instead of a certain amount per hour. This is similar to employees being paid piece rate. This is based on how many parts per hour they can produce or how many services per hour they can produce, but this is based on the amount of time that it takes them to do their job instead.

The Roman Plan works both ways, though, and can be an advantage for employees who work quickly. This means that if the worker completes the job in less time, it takes others, in other words, the standard time it normally takes, and then he or she is then entitled to a bonus on top of their normal time-rated wages. The bonus is normally a percentage of the worker's time rate. This means their bonus is calculated on the percentage of wages earned for working on a specific job and is not calculated for the time that they saved by being quicker. This is oftentimes referred to as the Halsey Plan. This percentage is normally equal to the amount of time saved in comparison to the standard time for that job. In other words, the bonus equals time saved divided by the standard time it takes to do the job. For example, if the standard time rate is 8 hours and the rate per hour is $20 an hour, the employee can sometimes make double their normal rate of pay if they are fast at their job.

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Fladger Associates works with several different industries to implement plans for rates of pay and other factors that are beneficial to both employees and their employers. The employment professionals at Fladger Associates work with employers to find the correct employees to fill certain job positions and negotiate wages as needed. Contact us for an appointment today!