The drawbacks to a piece-rate plan include the following;
Workers pay much more attention to quantity and not quality:
The major disadvantage of this kind of piece-rate pay is that the workers try too hard to finish the task at hand, that the quality of work suffers and they give up substandard work (DellaVigna, 2020).
In the attempt of trying to make more money, they often cut corners and even give up incomplete work hoping that this will go undetected. Things like this significantly affect the reputation and name of the company concerned.
Planning for the future becomes rather challenging:
As mentioned above, the workers often decide on their deadline, and they complete the work when they can, it is for this very reason that there is no uniformity in the work output and it becomes quite a challenging task to plan for the future of the company or even to make out a proper schedule of production
.
Finding and fixing on a reasonable piece cost is a rather challenging task:
Another significant disadvantage of this system is that the workers and employers find it very tough to fix a reasonable cost for the finished product (DellaVigna, 2020).
Narrowing down on one figure which both parties will be happy with is quite a challenging and even time-consuming task which requires hours of talking, convincing and negotiations.
It puts immense pressure on all the employees:
In such a system, the workers try their best to make as many products as possible. In the attempt of trying to make more and more money, they often end up overworking themselves.
Doing too much work without taking breaks is bound to take a toll on the health of these workers. As a result, they might come in for serious problems like stress, heart trouble or even high blood pressure.
Sometimes, even more, supervision is required:
As mentioned above, an advantage of the system is that the workers work independently and don’t need micromanaging.
But sometimes in the attempt of trying to work quicker, the workers give up bad quality work and even use inferior quality products. By this, the finished products require even more scrutiny, and most often, many products get rejected because they are not fit to be sold to the customers.
References
DellaVigna, S., List, J. A., Malmendier, U., & Rao, G. (2020). Estimating social preferences and gift exchange with a piece-rate design.