EXISTING INCENTIVE SCHEMES

EMPLOYEE
CATEGORY/
INCENTIVE
PIECE RATE

INCENTIVE
BONUS ( For
Maintenance
Workers only)
PRODUCTIVITY
LINKED BONUS

NGO

NIE

DIRECT IE

INDIRECT IE

Piece Work %
Notional Time wages
( calculated at Pmin)

50 % of the piece work

profit earned by piece
workers in a section /
factory

-30 days (Basic Pay + DA) for 25 % PWP at the aggregate board
level
-Provision for variable addition of 1 day of basic salary per 2 %
increase in the % PWP at the aggregate level, provided that the
first increase of 1 days salary is contingent upon an increase of
4 % PWP at the aggregate level
- Maximum limit Rs 3500 for 30 days and Rs 4667 for 40 days

COMPARISON OF SALARY OF DAY WORKER AND PIECE WORKER

(EXAMPLE OF A HIGHLY SKILLED IE)

OLD
BASIC

4000

OLD DP

2000

OLD
CCA+TA

400

MIN BASIC
Before 6th Pay
Commission

47%
OLD DA
DA

27%

ATTENDANCE

26

TOTAL DAYS

31

SUNDAY

HOLIDAY

LEAVE

PWP

50%

PW PROFIT

MBA

7440

GRADE PAY

GP

2400

BASIC

BA

7440

MIN BASIC +GP

MB

9840

BASIC+GP

9840

TA

TA

1600

OTH

39

OTB HRS

OTBH

26

DOT HRS

DOTH

13

TOTAL OT HOURS

DAY WORK AND PIECE WORK

TIME WAGE

TW

BA/(N-S-H)

9840

HOLIDAY PAY

HP

BH/(N-S)

LEAVE PAY

LP

BL/(N-S-H)

HRA

30 % B

2952

DA

DA

27 % (B+TA)

3088.8

NET PAY

NP

TW+HP+LP+HRA+DA+TA

17480.8

HRA

OT CALCULATIONS
DAY WORK

PIECE WORK
30

MIN OLD BASIC/200

20

OT RATE

OTR

(OLD BASIC+DP)/200

INC OT
RATE

IN.OT
R

NA

DOT RATE

DOR

(OLD DA+CCA)/200

13.8

NA

OTB RATE

OTBR

(OLD
BASIC+DP+2*DA)/200

58.2

1.25*[(OLD BASIC+DP)
+2*DA]/200

65.7

OT PAY

OT

OTROTH

1170

OTROTH

780

INC OT PAY

IN.OT

NA

IN OTROTBH

DOT

DOT

DORDOTH

179.4

DORDOTH

BONUS OT

OTB

OTBROTBH

1513.2

OTBROTBH

1708

NET OT

NOT

OT+DOT+OTB

2862.6

OT+IN.OT+DOT+OTB

2488

(OLD TW+OT)0.5

2390

NP+NOT+PW PROFIT

22359

(B-MB)/200

PIECE WORK PROFIT

0

GROSS PAY
GROSS PAY

GP

NP+NOT

20343.4

PW PROFIT
PIECE WORK PROFIT
=(OUTPUT HOURS / INPUT HOURS 1) 100 %

INPUT HOURS
= NO OF DAYS WORKED 8+ OT HOURS -13 ( for four Saturdays)

OUTPUT HOURS ARE BASED ON WORK DONE AS PER ESTIMATE

EXAMPLE OF PW BOOKING
GANG WORKERS CARD
HVF

MONTH

CARD NO

SECTION

WORK ORDER NO

WARRANT NO

4110433011
EXTRACT NO

GANG NO
001

ARTICLE
172.40.332

RATE FORM NO
172.40.332

PINION

OPERATION NO

NO ORDERED

SMH /OPN

TOT SMH
( for accepted
quantity)

50

100

0.75

75

60

100

2.5

250

EXAMPLE OF PW BOOKING
SUMMARY SHEET

Sl No

Gang
No

Card
No

Work
Order
No

Warrant
No

Estimate
No

Qty

Hrs
Booke
d

001

xxxxxx

abcd

mnop

1234

100

325

001

yyyyyy

efgh

qrst

7890

80

350

Gang Total Hours for Gang No 001

625

PIECE WORK PROFIT

=(OUTPUT HOURS / INPUT HOURS 1) 100 %
OUTPUT HOURS = 625 HRS
FOR GANG NUMBER 001 CONSISTING OF TWO PERSONS
INPUT HOURS=225 HRS + 230 HRS ( for example)
PIECE WORK PROFIT = (625/455 1)100 % = 37 %

PROPOSED INCENTIVE SCHEME

EMPLOYEE
CATEGORY/
INCENTIVE
SCHEME
MONTHLY
PRODUCTION
INCENTIVE
FOR DIRECT
IEs
VARIABLE PAY
SCHEME
( MONTHLY)
FOR INDIRECT
IEs / STAFFS
ANNUAL
INCENTIVE

NGO

NIE

DIRECT IE

INDIRECT IE

[BR Ws SEF
SAF] + [BRWi
IEF IAF]

Based on Key
Performance
Indicators
(KPI)

Based on Key
Performance
Indicators (KPI)

Based on Key
Performance
Indicators (KPI)

Based on
average monthly
performance

Based on average
monthly performance

Based on
attendance,
consistency of
performance and
achievement of
factory production
target

Based on
average
monthly
performance

DIRECT IEs

Monthly Incentive
INDIVIDUAL COMPONENT

SECTION COMPONENT
BR Ws SEF SAF

BR Wl IEF IAF

Where
BR = Base Rate of variable pay
+
Ws=Weightage for Section parameters
SEF =Section Efficiency Factor
SAF=Section Achievement Factor

Where
BR = Base Rate of variable pay
Wig=Weightage for Individual parameters
IEF = Individual Efficiency Factor
IAF= Individual Achievement Factor

Example
25 % 0.75 1.3 0.9

25 % 0.75 1.3 0.9

= 26.94 % of the months full (Basic+ DA) Attendance Factor

SECTION COMPONENT
COMPONENT

EXPLANATION

SECTION
EFFICIENCY FACTOR
(SEF)

Actual production for the month ( output SMH)

SECTION
ACHIEVEMENT
FACTOR (SAF)

2 (Actual input hours per week-48 hours)

Production Baseline ( output SMH)

1- {

48 hours

INDIVIDUAL COMPONENT
COMPONENT
INDIVIDUAL
EFFICIENCY FACTOR
(IEF)

INDIVIDUAL
ACHIEVEMENT
FACTOR (IAF)

EXPLANATION
DIW / DGWs efficiency rating for the month
Factorys efficiency rating for the month

1- {

2 (Actual input hours per week-48 hours)

48 hours

SECTION COMPONENT
COMPONENT

EXPLANATION

SECTION
EFFICIENCY FACTOR
(SEF)

Actual production for the month ( output SMH)

SECTION
ACHIEVEMENT
FACTOR (SAF)

2 (Actual input hours per week-48 hours)

Production Baseline ( output SMH)

1- {

48 hours

SECTION COMPONENT
COMPONENT

EXPLANATION

SECTION
EFFICIENCY FACTOR
(SEF)

Actual production for the month ( output SMH)

SECTION
ACHIEVEMENT
FACTOR (SAF)

2 (Actual input hours per week-48 hours)

Production Baseline ( output SMH)

1- {

48 hours

ANNUAL INCENTIVE FOR DIRECT IEs

Step 1: Eligibility based on attendance
with a floor of Rs 2500.

Attendance

Step 2 : Calculation

2% < Absenteeism < 10 % will

give floor of annual incentive

30 days wages ( Basic + DA)

Consistency Factor

Consistency Factor

Number of months in which

employee's efficiency rating >
(1/12) factorys efficiency rating

Factory Achievement Factor

Factory Achievement Factor

Actual output of the factoy
( SMH of the finished products
issued) / Target output of the
factory ( SMH)

SIMULATION FOR A HIGHLY SKILLED IE ( before

6th Pay Commission)
PIECE WORK

PROPOSED INCENTIVE
SCHEME

HOURS OF WORKING / WEEK 54

HOURS OF WORKING / WEEK

48

INPUT HOURS / MONTH

234

INPUT HOURS / MONTH

208

BASIC PAY (MIN)

4000

BASE RATE

30 %

NTW

4500

IMPROVEMENT IN EFFICIENCY

56 %

PW PROFIT

50 %

SEF

1.56

PW EARNING

2250

IEF

1.56

OVERTIME HOURS

26

SAF

DOUBLE RATE OT PAY

3047

IAF

GROSS MONTHLY PAY

16797

Ws

0.75

PLB

285

Wi

0.25

TOTAL GROSS PAY

17082

MONTHLY INCENTIVE

4738

GROSS MONTHLY PAY

16238

ANNUAL INCENTIVE

844

TOTAL GROSS PAY

17082

OTHER CATEGORIES OF EMPLOYEES

MAINTENANCE

NGO/ PRODUCTION
SHOP

TOOL ROOM

PLANNING &
CONTROL

MATERIAL
MANAGEMENT

ENGINEERING
OFFICE

OUTPUT

PRODUCTION
SECTION
( DIRECT IEs)

ENGINEERING
STORES
OFFICE

QC

ADMINISTRATION

INCENTIVE SHOULD BE BASED ON KEY PERFORMANCE INDICATORS (KPI)

What is KPI
KPI is a performance measure that enables the organisation to determine
whether or not they are meeting their objectives

Applicable to
- Indirect IEs
-NIEs
-NGOs

COMPUTATION OF IN THE CENTIVE PAY

BASED ON KPIs
HIGHEST

LOWEST

RATING FOR THE MONTH

Weightage 1
X

100-90%

Final

90-80%

80-70%

70-60%

<60%

2.X ( for
90-80 %)

Performance
Index achieved by
the individual in
the month

Incentive (%)

1-1.9

20

2-3.9

15

4-5

10f

EXAMPLES
SECTION : PRODUCTION & TOOL ROOM
KEY RESULT AREA

KEY PERFORMANCE INDICATORS

WEIGHT

PRODUCTION
REPORT SHOWING
OUTPUT AND
WARRANTWISE
BOOKING

ACHIEVEMENT OF SECTION
EFFICIENCY TARGETS

0.5

REJECTION
ANALYSIS, QUALITY
OF PRODUCT
MANYFACTURING
PROCESS

ACHIEVEMENT AGAINST UAR %

TARGETS

0.2

WORK IN PROGRESS

PERCENTAGE OF WARRANTS
CLOSED AGMARKSAINST
PREDETERMINED BENCH

0.15

COST REDUCTION

ACHIEVENT OF COST REDUCTION

TARGETS

0.15

EXAMPLES
SECTION : ADMINISTRATION ( BILLS)
KEY RESULT AREA

KEY PERFORMANCE INDICATORS

WEIGHT

PERFORMANCE
MONITORING

Percentage of cases received and settled

in time
1.
Preparation of bills
2.
Passing of bills

0.3
0.3

GRIEVANCE
REDRESSAL

Percentage of grievances received and

disposed in time

0.2

AUDIT REPLIES
AGAINST INTERNAL
AND TEST AUDIT

Percentage of cases received and

disposed in time

0.1

INCOM TAX
RECOVERY AND
RETURN

Recovery & Return

1.
Filing of returns in time
2.
Timely recovery

0.1

AWARDS FOR OFB ORGANISATION

NAME OF
AWARD

INSTITUTED
BY

ELIGIBILITY

DETAILS

SODET AWARD
FOR R & D
INNOVATION

DODET ( SOCIETY
FOR DEFENCE
TECHNOLOGISTS)

ENGINEERS /
SCIENTISTS OF
THE MEMBER
ORGANISATION

NOMINEE ( MINIMUM 5 YEARS SERVICE)

SHOULD BE AN OUTSTANDING
TECHNOLOGIST / ENGINEER IN THE
FIELD OF PRODUCTION/ R & D ETC.

MOD ( DEPTT OF
DEF PROD) AWARD
FOR EXCELLENCE
AMONG
ORDNANCE
FACTORIES AND
DEFENCE PSUs

MINISTRY OF
DEFENCE

OFB

A)

INSTITUTIONAL AWARDS
1. FOR EXCELLENCE IN PERFORMANCE
2. FOR BEST PERFORMANCE IN EXPORTS

B)
DIVISION/ FACTORY AWARDS
C)
GROUP/ INDIVIDUAL AWARDS
1. IMPORT SUBSTITUTION
2. DESIGN EFFORT
3. INNOVATION

AWARDS FOR OFB ORGANISATION

NAME OF
AWARD

DONATED
BY/YEAR

ELIGIBILIT
Y

DETAILS

PURPOSE

SANTU
SHAHANEY
MEMORIAL
SHIELD &
PRIZE

Smt Nirmala
Shahaney w/o
Late Santu
Shahaney/ 1966

All Group A
( IOFS)
officers
( excluding
GM)

Rolling Shield, Medal,

Badge, Certificate
from DGOF and
Chairman. A cash
award of Rs. 5000.

Sustained effort of sufficiently

high standard in production
engineering over a long
period, qualities of boldness
of conception and drive with
dedication to work and duty

O P GUPTA
BEST
MANAGER
AWARD IN
A&E GROUP
OF
FACTORIES

Shri OP Gupta,
Ex Addl DGOF /
1996

All Group
Managers
( excluding
GM)

Rolling Shield,
Certificate
from DGOF &
Chairman.
A cash award of
Rs.3000.

Contribution towards
streamlining of process/
design of a new equipment
and maximising production,
consistent with lowest
accident frequency.

GEN J N
CHOUDHURY
SHIELD

Gen J N
Choudhury, Ex.
Chief of Army
Staff / 1964

All employees
and JWMs

A running shield.
Replica of the shield
and Commendation
certificate from DGOF
& Chairman. A cash
award of Rs 3000 and
two awards @ Rs 1500
each along with
certificate

Increase of productivity by
application of such idea(s) as
quantifiable by savings
actually made or considered
possible in the utilisation of
men, machines, materials and
resources.

AWARDS FOR OFB ORGANISATION

NAME OF
AWARD

DONATED ELIGIBILI DETAILS

BY/YEAR TY

PURPOSE

S S JAUHARI
BEST GENERAL
MANAGER
AWARD

Shri S S
Jauhari, Ex
Addl DGOF/
1991

General
Manager

Rolling Shield, Replica,

Cash Award of Rs 10000
or as approved by OFB

For best performance

leadership in all spheres of
management

AYUDH AWARDS:
AYUDH RATNA
AYUDH BHUSHAN
AYUDH VIR
AYUDH SRI/DEVI

OF
BOARD/1999

All officers,
staffs and
workmen

Running Shield for Ayudh

Ratna. Citation cerificates.
Cash award of
Rs 10000 for Ayudh Ratna
Rs 5000 for Ayudh Bhushan
Rs 3000 for Ayudh Vir
Rs 2000 for Ayudh Devi/ Sri

Showing exemplary zeal

and enthusiasm in
discharge of their duties
towards overall growth of
the organisation

BEST ORDNANCE
FACTORY
EFFICIENCY
TROPHY

Shilpi
Sansad, GSF,
Cossipore/19
63-64

All OFs

A running shield.
Replica

AWARDS FOR OFB ORGANISATION

NAME OF
AWARD

DONATED
BY/ YEAR

ELIGIBILI
TY

DETAILS

PRIME
MINISTERS
SHRAM
AWARD

Ministry of
Labour/ 1985
( Shram Vir
National Award
since 1983)

All workmen
of Ordnance
Factories

Cash award of
(i)
Rs 200000.
(ii)
Rs 100000
(iii)
Rs 60000
(iv)
Rs 40000
Certificate, Railway pass

AWARD OF
PRESIDENTS
FIRE SERVICE
MEDAL

President of
India

Fire Service
Personnel

PURPOSE