Wage and Salary description

8/19/2019 Wage and Salary description

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WAGE AND SALARY ADMINISTRATION

The main objective of wage and a!a"# adminit"ation i to etab!ih and maintain an

e$%itab!e wage and a!a"# #tem& Thi i o beca%e on!# a '"o'e"!# deve!o'edcom'enation #tem enab!e an em'!o#e" to att"act( obtain( "etain and motivate 'eo'!e of

"e$%i"ed ca!ib"e and $%a!ification in hi)he" o"ganiation& Thee objective can be een inmo"e o"de"!# manne" f"om the 'oint of view of the o"ganiation( it individ%a! em'!o#ee

and co!!ective!#& The"e a"e o%t!ined and dic%ed %be$%ent!#*

Organisational Objectives:

The com'enation #tem ho%!d be d%!# a!igned with the o"ganiationa! need and ho%!da!o be f!e+ib!e eno%gh to modification in "e'one to change&

Accordingly, the objectives of system should be to:

,& Enab!e an o"ganiation to have the $%antit# and $%a!it# of taff it "e$%i"e&

-& Retain the em'!o#ee in the o"ganiation&

.& Motivate em'!o#ee fo" good 'e"fo"mance fo" f%"the" im'"ovement in 'e"fo"mance&

/& Maintain e$%it# and fai"ne in com'enation fo" imi!a" job&

0& Achieve f!e+ibi!it# in the #tem to accommodate o"ganiationa! change a and whenthee ta1e '!ace&

2& Ma1e the #tem cot3effective&

Individual Objectives:

From individual employee’s point of view, the compensation system should have

the following objectives:

,& En%"e a fai" com'enation&

-& 4"ovide com'enation acco"ding to em'!o#ee5 wo"th&

.& Avoid the chance of favo%"itim f"om c"ee'ing in when wage "ate a"e aigned&

/& Enhance em'!o#ee mo"a!e and motivation&

Collective Objectives:

hese objectives include:

,& 6om'enation in ahead of inf!ation&

-& Matching with ma"1et "ate&


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.& Inc"eae in com'enation "ef!ecting inc"eae in the '"o'e"it# of the com'an#&

/& 6om'enation #tem f"ee f"om management dic"etion&

!each has listed the five objectives of wage and salary administration:

,& To "ec"%it 'e"on fo" a fi"m

-& To cont"o! 'a#3"o!!

.& To atif# 'eo'!e( "ed%ce the incidence of t%"nove"( g"ievance( and f"iction&

/& To motivate 'eo'!e to 'e"fo"m bette"

0& To maintain a good '%b!ic image&

"rinciples of wage and salary administration:

he main principles that govern wage and salary fi#ation are three:

,& E+te"na! E$%it#

-& Inte"na! E$%it#

.& Individ%a! Wo"th&

$% ternal &'uity:

Thi '"inci'!e ac1now!edge that facto")va"iab!e e+te"na! to o"ganiation inf!%ence !eve! of

com'enation in an o"ganiation& Thee va"iab!e a"e %ch a demand and %''!# of !abo%"(the ma"1et "ate( etc& If thee va"iab!e a"e not 1e't into conide"ation whi!e fi+ing wage anda!a"# !eve!( thee ma# be in%fficient to att"act and "etain em'!o#ee in the o"ganiation&

The '"inci'!e of e+te"na! e$%it# en%"e that job a"e fai"!# com'enated in com'a"ion toimi!a" job in the !abo%" ma"1et&

(% Internal &'uity:

O"ganiation have va"io% job which a"e "e!ative in va!%e te"m& In othe" wo"d( the va!%e

of va"io% job in an o"ganiation a"e com'a"ative& Within #o%" own De'a"tment( 'a# !eve!of the teache" 74"ofeo"( Reade"( and Lect%"e"8 a"e diffe"ent a 'e" the 'e"ceived o" "ea!

diffe"ence between the va!%e of job the# 'e"fo"m&

Thi "e!ative wo"th of job i ace"tained b# job eva!%ation& Th%( an idea! com'enation

#tem ho%!d etab!ih and maintain a''"o'"iate diffe"entia! baed on "e!ative va!%e of job& In othe" wo"d( the com'enation #tem ho%!d en%"e that mo"e diffic%!t job ho%!d

be 'aid mo"e&

)% Individual *orth:


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Acco"ding to thi '"inci'!e( an individ%a! ho%!d be 'aid a 'e" hi)he" 'e"fo"mance& Th%(the com'enation #tem( a fa" a 'oib!e( enab!e the individ%a! to be "ewa"ded

acco"ding to hi cont"ib%tion to o"ganiation&

A!te"native!# 'ea1ing( thi '"inci'!e en%"e that each individ%a!5 'a# i fai" in com'a"ionto othe" doing the ame)imi!a" job( i&e&( 9e$%a! 'a# fo" e$%a! wo"15& In %m and

%btance( a o%nd com'enation #tem ho%!d encom'a facto" !i1e ade$%ac# of wage(ocia! ba!ance( %''!# and demand( fai" com'a"ion( e$%a! 'a# fo" e$%a! wo"1 and wo"1mea%"ement&

Meaning and objective of Wage and Sa!a"# Adminit"ative*

A Wage i the "em%ne"ation 'aid fo" the e"vice of !abo" in '"od%ction 'e"iodica!!# to anEm'!o#ee ) wo"1e"& So 'a#ment made to !abo" i gene"a!!# "efe""ed to a wage& Wage a!o

"efe" to the ho%"!# "ate 'aid to %ch g"o%' a '"od%ction and maintenance& Sa!a"# no"ma!!#"efe" to the 'e"iodica!!# "ate 'aid to c!e"ica!& Adminit"ative and '"ofeiona! em'!o#ee&

So mone# 'aid 'e"iodica!!# to 'e"on whoe o%t'%t cannot be mea%"ed i gene"a!!#"efe""ed a a!a"#& Wage and a!a"# a"e 'aid a 'e" cont"act of em'!o#ment& Wage inc!%de

baic wage ) a!a"# and a!!owance& A!!owance a"e 'aid in addition to baic wage tomaintain the va!%e of baic wage ove" a 'e"iod of time& In India( diffe"ent Act inc!%de

diffe"ent item %nde" wage& Tho%gh a!! the !et inc!%de baic wage and Dea"nea!!owance %nde" the item wage& E&g& %nde" the Wo"1men5 6om'enation Act( ,:-.(

ection-7m8 wage fo" !eave 'e"iod( ho!ida#( ove"time 'a#( bon%( attendance bon% andgood cond%ct bon% fo"m 'a"t of wage and %nde" the 'a#ment of wage Act( ,:.2 ection

-7vi8 an# "ewa"d of ett!ement and '"od%ction bon%( if 'aid contit%te wage&Wage and a!a"# adminit"ation i etab!ihment and im'!ementation of o%nd 'o!icie

and '"actice of em'!o#ee com'enation& Wage 'o!icie of diffe"ent o"gani;ation ve"#

Somewhat& Some o"gani;ation 'a# minim%m necea"# to att"act the "e$%i"ed n%mbe" and1ind of !abo"( whi!e ome o"gani;ation 'a# we!! above the going "ate in the !abo" ma"1et&


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Wage if de'endent gene"a!!# on the "ate of wage which ma# be an ho%"!# "ate o" time"ate o" baed on a 'iece "ate i&e& de'endent on wo"1e"5 o%t'%t& The time and 'iece o%t'%t

"ate wage '!an a"e the two baic #tem& A!! othe" '!an a"e im'!# va"iation of thee two&In thi wage #tem( an em'!o#ee i 'aid a define amo%nt of mone# fo" a 'ecific 'e"iod

of wo"1& 4"od%ction of an em'!o#ee i not ta1en into conide"ation to fi+ the wage& In 'iecewage #tem( an em'!o#ee i 'aid fi+ed "ate 'e" %nit '"od%ced of job com'!eted&

The 4G


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When #o% a"e atified with the 'a# change( #o% can "%n a '"og"am that %'date em'!o#ee

"eco"d with the info"mation in the wo"1tab!e&

o" em'!o#ee whoe job a"e aociated with 'a# g"ade te'( thei" 'a# "ate a"e a!o

aociated with the 'a# g"ade te'& To change an em'!o#ee 'a#( #o% m%t eithe" advance

the em'!o#ee to the ne+t 'a# g"ade te'( o" change the 'a# "ate aociated with 'a# g"adete'& When #o% need to advance eve"a! em'!o#ee to the ne+t 'a# g"ade te'( #o% can

ave time and "ed%ce data ent"# b# "%nning a '"og"am to im%!taneo%!# advance a g"o%'

of em'!o#ee&

Afte" #o% have finihed ente"ing '"o'oed 'a# change fo" a a!a"# "eview g"o%'( #o% can

'"int the Em'!o#ee Sa!a"# Ana!#i "e'o"t& Fe thi "e'o"t to "eview em'!o#ee a!a"#

hito"ie and '"o'oed 'a# change&

Wage and a!a"# adminit"ation inc!%de the fo!!owing ta1*

•

Ente"ing 'a# change fo" individ%a! em'!o#ee

• Wo"1ing with a!a"# "eview g"o%'

• Wo"1ing with 'a# g"ade te' adminit"ation

• Reviewing the Em'!o#ee Sa!a"# Ana!#i "e'o"t

acto" affecting wage and a!a"# adminit"ation

the following factors should be taen into consideration in determining wage andsalary structure of worers:

-i. /abour 0nions:

The !abo%" %nion attem't to wo"1 and inf!%ence the wage '"ima"i!# b# "eg%!ating o"

affecting the %''!# of !abo%"& The %nion e+e"t thei" inf!%ence fo" a highe" wage anda!!owance th"o%gh co!!ective ba"gaining with the "e'"eentative of the management&

If the# fai! in thei" attem't to "aie the wage and othe" a!!owance th"o%gh co!!ective

ba"gaining( the# "eo"t to t"i1e and othe" method whe"e b# the %''!# of !abo%" i

"et"icted& Thi e+e"t a 1ind of inf!%ence on the em'!o#ee to conce"ned tet 'a"tia!!# thedemand of the !abo%" %nion&

-ii. "ersonal perception of wage:

Whethe" the wage i ade$%ate and e$%itab!e de'end not on!# %'on the amo%nt that i 'aid

b%t a!o %'on the 'e"ce'tion and the view of the "eci'ient of the wage& Even tho%gh thewage i above the going wage "ate in the comm%nit# if it i !owe" than that of fe!!ow wo"1e"

deemed infe"io"( it wi!! be "ega"ded a ine$%itab!e in the e#e of the "eci'ient of the wage&


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A man5 'e"ce'tion of the e$%it# of hi wage wi!! %ndo%bted!# affect hi behavio%" in joiningand contin%ing in the o"ganiation&

-iii. Cost of living:

Anothe" im'o"tant facto" affecting the wage i the cot of !iving adj%tment of wage& Thi

a''"oach tend to va"# mone# wage de'ending %'on the va"iation in the cot of !ivinginde+ fo!!owing "ie o" fa!! in the gene"a! '"ice !eve! and con%me" '"ice inde+& It i an

eentia! ing"edient of !ong te"m !abo%" cont"act %n!e '"oviion i made to "eo'en thewage c!a%e 'e"iodica!!#&

The"e a"e mea%"ement '"ob!em both in ace"taining '"od%ctivit# and cot of !ivinginc"eae& Thi '"ob!em ma# !ead to !ac1 of %nde"tanding and %nanimit# on the 'a"t of the

management and the wo"1e"&

-iv. 1overnment legislation:

The !aw 'aed and the !abo%" 'o!icie fo"med b# the Gove"nment have an im'o"tant

inf!%ence on wage and a!a"ie 'aid b# the em'!o#ee& Wage and a!a"ie can5t be fi+edbe!ow the !eve! '"ec"ibed b# the gove"nment& The !aw on minim%m wage( ho%" of wo"1(e$%a! 'a# fo" e$%a! wo"1( 'a#ment of dea"ne and othe" a!!owance( 'a#ment of bon%(

etc& have been enacted and enfo"ced to b"ing abo%t a mea%"e of fai"ne in com'enatingthe wo"1ing c!a&

-v. Ability to pay:

Labo%" %nion have often demanded an inc"eae in wage on the bai that the fi"m i

'"o'e"o% and ab!e to 'a#& ?oweve"( the f%ndamenta! dete"minant of the wage "ate fo"the individ%a! fi"m emanate fo" %''!# and demand& If the fi"m i ma"gina! and cannot

affo"d to 'a# com'etitive "ate( it em'!o#ee wi!! gene"a!!# !eave it fo" bette" 'a#ing job&

?oweve"( thi adj%tment i neithe" immediate no" 'e"fect beca%e of '"ob!em of !abo%"immobi!it# and !ac1 of 'e"fect 1now!edge of a!te"native& If the fi"m i high!# %ccef%!(the"e i !itt!e need to 'a# fo" mo"e than the com'etitive "ate to obtain 'e"onne!&

-vi. +upply and demand:

A tated ea"!ie"( the wage i a '"ice fo" the e"vice "ende"ed b# a wo"1e" o" em'!o#ee& The

fi"m dei"e thee e"vice( and it m%t 'a# a '"ice that wi!! b"ing fo"th the %''!#( which icont"o!!ed b# the individ%a! wo"1e" o" b# a g"o%' of wo"1e" acting togethe" th"o%gh thei"

%nion& The '"actica! "e%!t of the o'e"ation of thi !aw of %''!# and demand i the c"eationof going3 wage "ateH&

It i not '"acticab!e to d"aw demand and %''!# c%"ve fo" each job in an o"ganiation eventho%gh( theo"etica!!#( a e'a"ate c%"ve e+it fo" each job& B%t( in gene"a!( if an#thing wo"1

to dec"eae the %''!# of !abo%" %ch a "et"iction b# a 'a"tic%!a" !abo%" %nion( the"e wi!!be a tendenc# to inc"eae the wage& The "eve"e of each it%ation i !i1e!# to "e%!t in a

dec"eae in em'!o#ee wage( '"ovided othe" facto"( %ch i thoe dic%ed be!ow( do notinte"vene&

-vii. "roductivity:


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Inc"eaing!# the"e i a t"end towa"d gea"ing wage inc"eae to '"od%ctivit# inc"eae&4"od%ctivit# i the 1e# facto" in the o'e"ation of a com'an#& ?igh wage and !ow cot a"e

'oib!e on!# when '"od%ctivit# inc"eae a''"eciab!#& The above facto" e+e"cie a 1ind of gene"a! inf!%ence on wage "ate& In addition( the"e a"e eve"a! facto" which do affect the

individ%a! diffe"ence in wage "ate&

he most important factors which affect the individual differences in wage ratesare:

7a8 Wo"1e"5 ca'acit# and age

7b8 Ed%cationa! $%a!ification

7c8 Wo"1e" e+'e"ience

7d8 ?a;a"d invo!ved in wo"1

7e8 4"omotion 'oibi!itie

7f8 The '"evai!ing wage in the comm%nit#

7g8 Stabi!it# of em'!o#ment

7h8 Demand fo" the '"od%ct and

7i8 4"ofit o" %"'!% ea"ned b# the o"ganiation&

The eight facto" inf!%encing the dete"mination of wage "ate a"e a fo!!ow* ,& Abi!it# to 4a#

-& Demand and S%''!# .& 4"evai!ing Ma"1et Rate /& 6ot of Living 0& Ba"gaining of T"ade

Fnion 2& 4"od%ctivit# =& Gove"nment Reg%!ation >& 6ot of T"aining&

The wage 'a#ment i an im'o"tant facto" inf!%encing !abo%" and management "e!ation&

Wo"1e" a"e ve"# m%ch conce"ned with the "ate of wage a thei" tanda"d of !iving i

connected with the amo%nt of "em%ne"ation the# get& Management( gene"a!!#( do not come

fo"wa"d to 'a# highe" wage beca%e cot of '"od%ction wi!! go %' and '"ofit wi!! dec"eae

to the e+tent&

Following factors influence the determination of wage rate:

,& Abi!it# to 4a#*

The abi!it# of an ind%t"# to 'a# wi!! inf!%ence wage "ate to be 'aid( if the conce"n i "%nning

into !oe( then it ma# not be ab!e to 'a# highe" wage "ate& A '"ofitab!e ente"'"ie ma#

'a# mo"e to att"act good wo"1e"& D%"ing the 'e"iod of '"o'e"it#( wo"1e" a"e 'aid highe"

wage beca%e management want to ha"e the '"ofit with !abo%"&

-& Demand and S%''!#*


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The !abo%" ma"1et condition o" demand and %''!# fo"ce to o'e"ate at the nationa! and

!oca! !eve! and dete"mine the wage "ate& When the demand fo" a 'a"tic%!a" t#'e of 1i!!ed

!abo%" i mo"e and %''!# i !e than the wage wi!! be mo"e& One the othe" hand( if %''!#

i mo"e demand on the othe" hand( i !e then 'e"on wi!! be avai!ab!e at !owe" wage "ate

a!o&

Acco"ding to Mecon(H the %''!# and demand com'enation c"ite"ion i ve"# c!oe!# "e!ated

to the '"evai!ing 'a# com'a"ab!e wage and on3going wage conce't ince( in eence to a!!

thee "em%ne"ation tanda"d a"e dete"mined b# immediate ma"1et fo"ce and facto"&

.& 4"evai!ing Ma"1et Rate*

No ente"'"ie can igno"e '"evai!ing wage "ate& The wage "ate 'aid in the ind%t"# o" othe"

conce"n at the ame '!ace wi!! fo"m a bae fo" fi+ing wage "ate& If a %nit o" conce"n 'a#

!ow "ate then wo"1e" !eave thei" job wheneve" the# get a job omewhe"e e!e& It wi!! not

be 'oib!e to "etain good wo"1e" fo" !ong 'e"iod&

/& 6ot of Living*

In man# ind%t"ie wage a"e !in1ed to ente"'"ie cot of !iving which en%"e a fai" wage

to wo"1e"& The wage "ate a"e di"ect!# inf!%enced b# cot of !iving of a '!ace& The wo"1e"

wi!! acce't a wage which ma# en%"e them a minim%m tanda"d of !iving&

Wage wi!! a!o be adj%ted acco"ding to '"ice inde+ n%mbe"& The inc"eae in '"ice inde+ wi!!

e"ode the '%"chaing 'owe" of wo"1e" and the# wi!! demand highe" wage& When the '"ice

a"e tab!e( then f"e$%ent wage inc"eae ma# not be "e$%i"ed

0& Ba"gaining of T"ade Fnion*

The wage "ate a"e a!o inf!%enced b# the ba"gaining 'owe" of t"ade %nion& St"onge" the

t"ade %nion( highe" wi!! be the wage "ate& The t"ength of a t"ade %nion i j%dged b# it

membe"hi'( financia! 'oition and t#'e of !eade"hi'&

2& 4"od%ctivit#*

4"od%ctivit# i the cont"ib%tion of the wo"1e" in o"de" to inc"eae o%t'%t& It a!o mea%"e

the cont"ib%tion of othe" facto" of '"od%ction !i1e machine( mate"ia!( and

management &Wage inc"eae i ometime aociated with inc"eae in '"od%ctivit#& Wo"1e"

ma# a!o be offe"ed additiona! bon%( etc&( if '"od%ctivit# inc"eae be#ond a ce"tain !eve!& It

i common '"actice to i%e '"od%ctivit# bon% in ind%t"ia! %nit&

=& Gove"nment Reg%!ation*

To im'"ove the wo"1ing condition of wo"1e"( gove"nment ma# 'a a !egi!ation fo" fi+ing

minim%m wage of wo"1e"& Thi ma# en%"e them( a minim%m !eve! of !iving& In %nde"

deve!o'ed co%nt"ie ba"gaining 'owe" of !abo%" i wea1 and em'!o#e" t"# to e+'!oit

wo"1e" b# 'a#ing them !ow wage& In India( Minim%m Wage Act( ,:/> wa 'aed


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em'owe" gove"nment to fi+ minim%m wage of wo"1e"& Simi!a"!#( man# othe" im'o"tant

!egi!ation 'aed b# gove"nment he!' to im'"ove the wage t"%ct%"e&

>& 6ot of T"aining*

In dete"mining( the wage of the wo"1e"( in diffe"ent occ%'ation( a!!owance m%t be

made fo" a!! the e+e"cie inc%""ed on t"aining and time devoted fo" it&

Documents

Wage and Salary description