Effectiveness of the incentive schemes introduced in McDowell & Co Ltd

EXECUTIVE SUMMARY

Industrialization plays an important role in the economic development of a country. The gap in per capita income between the developed and a developing country like India is a serious concern. This is mainly due to the disparity in the structure of their economies. The former are large industrial economies while the latter are mainly agriculture-based economies.

The distillery of McDowell & Co Ltd is situated in hatidah, Patna District, Bihar. It can be grouped under a large-scale industry as the capital investment covers over crores of rupees and the number of labourers employed is also more. It can be grouped as a secondary industry because it produces goods, which are used for consumption.

The industrial revolution paved the way for the development of machinery, use of mechanical energy and establishment of factories employing large number of people.

Personnel management is that part of management which is concerned with people at work and their relationship within an enterprise. Its aim is to bring together and develop into an effective organization the men and women who make up an enterprise and having regard for the well being of the individual and of working groups, to enable them to make their best contribution to its success. An “incentive or reward” may be anything, which attracts a worker’s attention and stimulates him to work. An incentive scheme is a plan or program to motivate individual or group performance. An incentive plan may consist of both monetary and non-monetary elements. It can play an important part in improving an employee’s efficiency.

The research study on “Effectiveness of the incentive schemes introduced in McDowell & Co Ltd” was undertaken in the company’s distillery at hathidah, in Bihar t study the impact of the incentives provided and its effect on the functioning and productivity of the company.

The strength of the labour force of the company is 173. Incentives are paid only to the workers and not to the managerial cadre. The bottlery employees and the general /staff category enjoy different percentages of the incentive payments.

The study was conducted by collecting data using questionnaires. Questionnaires were distributed to workers to collect the relevant information. It contained both open ended and close ended questions. The questions were designed to gather all relevant information regarding the effectiveness of the incentives in the areas of production, industrial relations, motivation of the employees etc. The sample size was restricted to 40 for bottlery and 20 for general /staff category.

The study revealed that the incentive scheme increases productivity and creates inspiration in workers to contribute more towards the bottom line. The study has helped the company to analyze the effectiveness of its incentive schemes.

1.1 INDUSTRY PROFILE

ALCOHOLIC BEVERAGE INDUSTRY

The Indian alcoholic beverage industry is classified into beer, wine, country liquor; Indian made foreign liquor and the imported spirits segments. Under the constitution of India, the beverage alcohol industry is a state subject. The industry is highly regulated by the union and the state governments. While licensing Greenfield units or sanctioning capacities for production of alcohol is the central government’s domain, the authority to impose taxes, regulate distribution, storage and marketing lies with the state’s 65% of the industry is directly controlled by the state governments. With 29 states and union territories framing their own regulations and tax policies, which often change dramatically from year to year, the industry is often at a loss in planning for growth and investment.

In the recent times the beverage alcohol industry has been characterized by continuous down trading by consumers in the face of inexorably raising prices, driven by ever increasing levels of tax. This industry’s profitability is highly dependent on government regulations.

Changing cultural attitudes towards consumption of beverage alcohol combined with tangible increase in per capita disposable income and most importantly willingness of young consumer to spend, all point to the healthy growth prospects for the industry.

The industry has also to cope with a ban on advertising thus depriving it one of the most potent form of communication and brand building.

IMFL (Indian Made Foreign Liquor)

The IMFL industry in India is growing at about 14% per annum. Imported brands account for about 1.5% of the total consumption.

Consumption is predominately towards whisky, which accounts for nearly 60% of the market. High –end consumer price, due to high taxation has caused downward shift towards cheaper products in many categories.

Low per capita consumption, the high volume in the unorganized segment of the spirits business with likely transition into the organized sector, the changing consumer perception of the alcohol and the progressive regulatory changes are the key drivers to the growth of the IMFL industry.

The irrigational policies adopted by the various governments towards the IMFL industry have been a growth in the cheaper brands to the detriment of consumers.

The production and distribution of alcohol can be done only if they got the license for it from the state government. In BIHAR, currently the distribution of the IMFL is carried out only by the KSBC (BIHAR State Beverages Corporation), which is a state controlled body.

DISTILLERY INDUSTRY

In a distillery, the basic function is distillation and it is carried out with the help of highly sophisticated distillation plant filled with automation equipment to produce high quality alcohol, which is an integral part of the product. Molasses, which is waste product of sugar industry, is being used for producing alcohol after fermentation. Continuous fermentation techniques are used in distillery for maximum efficiency in producing alcohol. Every one (1) ton of molasses yields around

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