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As the two-year collective agreement lapsed recently, negotiations for another wage increase in the plantation sector has begun, with no success in the first round.
The upcountry estate sector employees staged protests recently demanding a daily wage of Rs 1000. Currently they are paid a daily wage of Rs 687, in both tea and rubber. The trade union expectation is a 45.56 percent increase. Can the RPCs afford this jump? Director of a RPC told me that he has to find another job as the company will close down. Similarly, the plantation worker also will have to find another job to fit into their requirements. Let us be more reasonable.
Profitability and productivity of an industry always become key issues whenever worker wages are discussed, inflation takes a back seat and the plantation industry is no exception.
Workers, whether in urban areas or estates, are equally affected by the rising cost of living. Besides, the absence of many unquantifiable benefits the workers in urban areas enjoy is a de-incentive for estate youth to work in estates.
Although both tea and rubber are experiencing a depressed market now production is also an issue. Tea and rubber prices were at attractive levels and profits up by 45 to 50 percent in rubber, were enjoyed a few years ago.
In this background, it may be useful to re-examine the concept of ‘Performance-linked wages’, as numerous debates are likely to emerge around this concept when the wage issue is discussed. However, this concept was discussed two years ago when the last wage increase negotiations were on.
Performance based
Performance-related wages are wages paid to someone relating to how well one works. Car salesmen, production line workers, for example, may be paid in this way or through commission.
Business theorists Professor Yasser and Dr. Wasi were great supporters of this method of payment, which is often referred to as PRP. They believed that money was the main incentive for increased productivity and introducing the widely used concept of ‘piece work’.
This standards-based system is used for evaluating employees and setting salaries by many employers. Standards-based methods have been in de facto use for centuries among commission-based sales staff: They are paid more for selling more and low performers do not earn enough to make keeping the job worthwhile, even if they manage to keep the job.
In addition to motivating the rewarded behaviour, standards-based methods can provide a level of standardization in employee evaluations, which can reduce fears of favouritism and make the employer’s expectations clear. For example, an employer might set a minimum standard of unachievable task, and reassign or replace employees who cannot perform at that level.
Employees would be secure in knowing that their performance was evaluated objectively, according to the standard of their work, instead of the whims of a supervisor or against an ever-climbing average of their group.
Criticism
A fundamental criticism of performance-related pay is that the performance of a complex job as a whole is reduced to a simple, often single measure of performance.
As a simple measure, this gives no regard to the quality of work, for instance, whether the target was achieved or whether the employer emerged satisfied. Performance-related pay may also cause a hostile work attitude. Many employees may compete for the attentions of a single manager.
Where an employer has been helped by more than one employee, further resentment may be caused if the incentive is taken by whoever happens to make the final stages of the target. Macroscopic factors such as an economic downturn may also make employees appear to be performing to a lower standard independent of actual performance.
Performance-based systems have met some opposition as they are being adopted by corporations and governments. In some cases, opposition is motivated by specific ill-conceived standards, such as one which makes employees work at unsafe speeds, or a system which does not take all factors properly into account.
In other cases, opposition is motivated by a dislike of the consequences. For example, a company may have had a compensation system which paid employees strictly according to their seniority. They may change to a system that pays workers according to how much they achieve. Low-performing senior employees would object to having their income cut to match their performance level, while a high-performing new employee might prefer the new arrangement.
Research
Academic evidence has increasingly mounted indicating that performance-related pay leads to the opposite of the desired outcomes when it is applied to any work involving cognitive rather than physical skill. Research has repeatedly demonstrated that as long as the tasks being undertaken are purely physical, performance-related pay works as expected. However, once rudimentary cognitive skills are required, it actually leads to poorer performance.
Cultural
An international study pointed out that cultural differences affect the kind of reward systems that are in use. According to the study, there is a connection among;
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Systems incorporating extensive social benefits and femininity and
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Status-based reward systems (as opposed to achievement-based) and high uncertainty avoidance,
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Individual performance-based systems and individualism,
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Employee ownership plans with individualism, low uncertainty avoidance and low power distance.
Plantation scenario
As an example, let us look at workers in tea plantations and it is expected that a similar scheme will apply for rubber workers, as well.
Indian experience
A brief description of the experience of a productivity incentive scheme for tea pluckers in South India may be useful at this juncture to serve as a guide for similar schemes in Sri Lanka.I
Initially, tea pluckers were paid a fixed daily wage plus a cost-of-living allowance (revised every quarter, based on published index numbers). In return, they had to harvest a minimum quantity of green leaf per day. For any excess quantity harvested above the norm, they were paid a plucking incentive.
This was a constant amount per kilogram of leaf but, in due course, the system was refined by having two incentive slabs (categories).
The general feeling among management was that the incentive scheme was defective in that the minimum quantity was the same in both the high and lean cropping months and that the rate of incentive was not attractive to the worker.
Accordingly, after collecting monthly data, going back ten years, from over 100 estates, in regard to yields and plucking averages, a scheme was formulated by the association of planters and taken up for internal consideration among its members.
Several of them had reservations on the grounds that the management that adopted long plucking intervals and were thus able to achieve higher plucking averages, would stand to lose by the scheme.
In the light of comments and suggestions, the minimum quantity of leaf to be plucked as well as the incentive slabs and rates were modified and a compromise was reached within the management camp, it being evident from the calculations that all managements would stand to gain from the proposed incentive system.
The essence of the scheme is that tea estates are classified into four categories depending on the green leaf yield for the month: (1) 1-400; (2) 401-800;(3) 801-1600 and (4) 1600+ kg green leaf per month. The base output to be plucked per day and the incentive slabs and rates are different for the four classes.
The same scheme is applicable both to hand plucking and to plucking with shears, thereby securing acceptance of the use of tools without payment of a differential wage.
The scheme comprised the following aspects:
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The green leaf yield was worked out by dividing the field weight of green leaf plucked for the month for the estate by the total area of mature tea; the area would include the pruned/skiffed area as well as the area under ‘tipping’.
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Green leaf yield per hectare was rounded off to the nearest kilogram.
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The base output was not the task as such but only the indicator above which the incentive wage was too calculated; all pluckers were expected to work normally and diligently for a full day and harvest the maximum output.
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On the first working day of each month, the management displayed on the muster notice boards an indication of the probable base output applicable for the month, having regard to the yield of the same month in the previous year and the weather conditions, favourable or otherwise. The management could alter the indicated base output at any time during the course of the month or at the close of the month, to take account of changes in the cropping pattern.
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For calculating the month’s yield, any crop plucked on holidays was excluded.
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A joint implementation committee comprising representatives of the employers and workers was appointed to oversee the implementation of the scheme and to examine worker’s grievances concerning the correctness of the yield and other parameters.
In conclusion, it is emphasized that a performance-based reward system for pluckers and tappers cannot, however, be successfully implemented in isolation. It has to be part of a wider package involving a parallel development of the field to generate a bigger crop for the system to be fair by the workers.
Professionalism in management is needed for the success of such schemes.
(The writer can be contacted at [email protected])
