This plan was originated by James Rowan of David Rowan and Sons of Glasgow, Scotland. The system is similar to Halsey plan except for a different method of computation of bonus.
Here the bonus is calculated as a proportion of the wages of time taken which the time saved bears to the standard time. The main features of Rowan plan are:
(i) There is a guaranteed day-wage for actual time taken on the basis of time rate.
(ii) Bonus is paid for the time saved.
(iii) Bonus is based on that proportion of the time wages which the time saved bears to the standard time.
Total earnings of a worker will be:
(Time taken x Time rate) + (Time taken x Time rate x)
The advantages and disadvantages of Rowan plan are as follows: Advantages
(i) The plan assures a minimum hourly rate.
(ii) The quality of output is protected since the bonus declines after the worker has reached a given level of efficiency.
(iii) Labour cost per unit and fixed overhead cost per unit are reduced with increase in production.
(i) The plan is not easily followed by most of the workers.
(ii) Efficiency beyond certain point is not rewarded. It fails to distinguish between a very efficient worker and a worker with a little more than average efficiency.
(iii) Since the employer gets a share of the wages of the time saved, the workers do not get the full benefit of their efforts.