Rowan Premium Plan

Rowan Premium Plan

Rowan Premium Plan was developed by James Rowan and is most popular in Britain today. It is an amended form of the Helsay Premium Plan. Under this wage payment system, the bonus or premium is calculated on the basis of the percentage of time saved, over the amount of time fixed. In other words, the percentage of time saved over the total allotted time is equal to the percentage of bonus over the total wages of the worker.



Fixed output 20 Units
Fixed time 10 Hours
Fixed Minimum wages (per hour) $2.00

Scenario 1

If the worker produces, 20 units within 8 hours only, his wages will be calculated below

Wage = 8 x $2 = $16

The bonus will be calculated using the following formula

Bonus = Time Saved x Total Time x Wage per hour / Total Fixed Time

Therefore, the bonus can be calculated as below

Bonus = 2 x 8 x 2 / 10 = $3.2

Wages for completing the work of 8 hours = 16 + 3.20 = $19.20

Scenario 2

If the worker takes the whole of the given time (10 hrs.) to produce 20 units, his wages will be

Wages for 8 Hours = $19.20

Wages for 1 hour = $19.20 / 8

Wages for 2 hours = 19.20 / 8 x 2 = $4.80

Wages for 10 hours = $24.00

Merits of the Rowan Premium Plan

  1. The calculation of the bonus is scientific, as it is proportionate to the percentage of time saved over the total time allotted.
  2. The workers are assured to get wages without any deductions.
  3. The profits derived from the efficiency of workers are distributed in a fixed ratio between the employer and the worker.

Demerits of the Rowan Premium Plan

  1. The more time is saved; the amount of bonus reduces, as compared to the previous bonus.
  2. This system is comparatively more complicated.

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