Authors
1 Faculty member of the Department of Economics, Faculty of Administrative Sciences and Economics, University of Isfahan
2 Master of Mobarakeh Steel Complex
Abstract
This paper examines the effectiveness of financial rewards on the production process of hot rolling mill in Mobarekeh Steel Complex. The authors hypothesize that the policy of financial rewards granting to personnel plays a positive and significant role to a certain extent in production effectiveness. It also postulates that rises in direct labour time, electricity and gas energies as well as machinery equipment and materials lead to an improvement in steel products that will be accepted by quality control unit and met with customer satisfaction.
To analyze the impacts of such determinants on production, an econometric Cobb-Douglas production model is specified and estimated using monthly data over the period of 1372:1-1376:12.
A dummy variable is employed in the model to indicate the effect of financial rewards on the production process, defining a policy for two separate periods in which workers mayor may not benefit from such rewards. Estimation results confirm that the hypothesis cannot be rejected and all explanatory variables have direct impacts on the dependant production variable.
Finally, a scenario of a 10 percent increase in the direct labor time, as an alternative policy, is conducted to show its effect on the model through a simulation procedure. Results reveal that the production process of the hot rolling mill in Mobarekeh Steel Complex is substantially influenced.
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