Scanlon Plan

It is the group incentive plan.

It is the plan wide scheme designed to involve workers in making suggestions for reducing the cost of operations and improving work methods by showing the gains of increased productivity. 

Under this plan, a constant proportion (ie. ratio of wages to sales value) of the added value of output is paid to the workers who are responsible for the addition of the value. The added value is the change in market value (including profit) resulting from an alteration in the form, location, or availability of a product or service., excluding the cost of purchased material or services used in production. 

Advantages-

• Used Financial incentives to increase productivity and reduce costs.
• Employees suggestions are considered. 
• Encourage a sense of partnership among workers

Suitability

• Number of workers small.
• Product lines and costs are stable.
• Healthy industrial relations.
• Good supervision.
• Management should have a strong commitment to the plan.