This report examines the effectiveness of bonus plans in the coal industry. The analysis uses theoretical, literature review, and empirical approaches to determine the impact of bonus plans on safety and productivity in underground coal mines. The basic finding is that the modal bonus plan in underground coal mining does not have a major impact on productivity and safety indicators. The design of the plan, organizational factors, and the process of introducing the plan all contribute to its relative ineffectiveness. Strategies and options for designing effective plans are presented.
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