INTRODUCTIONINTRODUCTION Wage policy is an important aspect of the personnel management . It is the monetary compensation which inspire the people to work ,because money satisfies the human needs . Though ,there are number of reasons which motivate the people to work ,yet the monetary rewards for the services rendered remain the most potent reason for engaging them in work . Different wages are given to the workers for different jobs .so the wage determination is the difficult as well as important task of the personnel management .

MEANING AND DEFINITIONMEANING AND DEFINITION OF WAGESOF WAGES

Wages means what a worker gets from employer in return , for the services rendered to him . The adequate payment of wages without any discrimination to employee keep their morale high .Wages includes both monetary and non- monetary benefits.

“Wages is a sum money paid by the employers to their employees for rendering to the services under a contract.”

- Benham

Wages Vs. Salaries Wages Vs. Salaries

The compensation paid to the workers for putting in the physical efforts in the process of production is termed as wages.

While the fixed remuneration paid to managerial, supervisory and clerical staff for a definite period for the services rendered is known as salaries .

METHODS OF WAGE METHODS OF WAGE PAYMENTSPAYMENTS

Time Rate Or Time Wage System

Piece Rate Or Piece Wage System

Incentive Plans Of Wage Payments

Time Rate Or TimeTime Rate Or Time Wage SystemWage System

The system in which the wages are paid on the basis of time,is known as time rate or time wage system .

It is an oldest system of wage payment and the wages are paid on the predetermined time i.e. hourly, daily, weekly, monthly .

The wages are paid to the workers , on the basis of time for which they work in the organization.

The output of the workers is immaterial for the purpose of calculating of wages .

Under this method the performance of the workers is observed and the efficient ones are promoted and inefficient ones are discharged .

To be contd…….To be contd……. The rate of wages may be revised from time to time

on the basis of cost of living index or according to the agreement between the workers and the employers.

It is also called as time rate plan . The wages under this can be calculated as follows-

Total wages = Total wages = No. of hours /days worked * Rate per hour/ day No. of hours /days worked * Rate per hour/ day

Suppose that a worker is paid at Suppose that a worker is paid at the rate of the rate of rs. 9 per hour rs. 9 per hour and he and he has spent has spent 200 hours 200 hours at work at work during a particular month. His during a particular month. His wages for the month will be wages for the month will be rsrs. . 1800 1800 ..

EXAMPLE

Suitability Of Time rate Wage System Suitability Of Time rate Wage System

Quality of work is more important than output. Supervision of work can be easily done. It is difficult to measure to output . specialists are required to performs the job. The work is not standardized. Frequent changes take place in nature of job . Delays and interruptions in work can not be

avoided. The value of output cannot be increased beyond a

certain limit.

ADVANTAGES ADVANTAGES Simple Security Beneficial To Fresher's Quality Production Acceptable To Unions Proper Handling Of

Machines And Tools Satisfactory Reduces Clerical Work Equality of Wages

DISADVANTAGESDISADVANTAGES

Lack Of Initiative Unscientific Difficult To Determine CostGreater Need For Supervision Lengthening Of The Work

Process Employer –Employee Conflict Too Much Security

PIECE RATE OR PIECEPIECE RATE OR PIECE WAGE SYSTEMWAGE SYSTEM

The system in which the workers are paid wages on the basis of their output is known as piece rate or piece wage system.

It is also an older system of wage payment .The wages are calculated exactly in proportion to the physical output

of the workers .In this system ,the workers are hired to work and not to spend time .The amout of wages of the worker depends upon the amount of work

done by him .

The wages of workers in piece rate system are The wages of workers in piece rate system are calculated as follows :-calculated as follows :- Total Wages = Units Produced * Rate Of Unit

Kinds Of Piece Rate Wage System Kinds Of Piece Rate Wage System

Straight Piece Rate Increasing Piece Rate Decreasing Piece Rate

Suitability Of Piece Rate Wage System Suitability Of Piece Rate Wage System

Work is standerdised .Quality is not important .Output can be measured exactly.Work is repetitive nature.Competitive conditions exist and cost control

is essential .Speed is very important .Employee’s efforts and output establish clear

relationships.

Advantages Of Piece Rate Wage System Advantages Of Piece Rate Wage System

Incentive for higher productionIncrease in productivity EconomyEasy estimation of costLesser supervisionCordial employer –employee

relationsKeep the workers busy

Disadvantages Of Piece Rate Wage System Disadvantages Of Piece Rate Wage System

Low Quality Insecurity To WorkersWastage Of ResourcesHealth HazardImpracticalDisunity Among WorkersLow Wages For BeginnersOpposition By Trade Unions

INCENTIVE PLANS OF INCENTIVE PLANS OF WAGE PAYMENTWAGE PAYMENTThe system of wage payment which combines the merits of time and piece rate wage methods is generally known as “Incentive Plans” . Incentive is an inducement for the workers to work hard .

“Incentive means that which incites or has a tendency to incite action .”

- George Terry

The main purpose of the incentive plans is The main purpose of the incentive plans is to:-to:-

Increase Productivity.

Decrease Costs.

Increase The Earning Of The Personnel.

Conditions for Effective Incentives PlansConditions for Effective Incentives Plans

Plan is clearly communicatedPlan is clearly communicatedPlan is understoodPlan is understoodRewards are easy to calculateRewards are easy to calculateEmployees participate in administering the planEmployees participate in administering the planEmployees believe they are being treated fairlyEmployees believe they are being treated fairlyEmployees believe they can trust the company Employees believe they can trust the company and that they have securityand that they have securityRewards are awarded as soon as possible after the Rewards are awarded as soon as possible after the desired performance.desired performance.

TYPES OF INCENTIVE PLANS TYPES OF INCENTIVE PLANS

INDIVIDUAL INCENTIVE PLANINDIVIDUAL INCENTIVE PLAN

INDIVIDUAL INCENTIVE PLANINDIVIDUAL INCENTIVE PLAN ON THE BASIS OF TIME ON THE BASIS OF TIME

HALSEY PLANHALSEY PLANHalsey premium plan is a simple combination of time and

speed based of payment.Under this plan, a minimum time wage is guaranteed to

every worker.A standard time is fixed for the completion of a job. If a

worker performs his job in less than the standard time ,he is given bonus . But the is penalty for performing the job in more than the standard time fixed.

The slow workers is paid the time wages and the efficient worker is paid some bonus in addition to the time wages .

The bouns is in proportion of the wages which he could have earned during the time saved .

Calculation Of Wages Under Halsey Calculation Of Wages Under Halsey Premium Plan Premium Plan Standard time (S) = 12 hours Time taken by a work (T ) = 8 hours Rate of wages (R ) = R.s. 9 per hourBonus ( P) = wages for 50% of the time saved

Total wages (W) = T * R + 50% of (S-T) * R Total wages (W) = T * R + 50% of (S-T) * R

= 8*9 + 50% * (12-8) * 9= Rs.90

ROWAN PLAN ROWAN PLAN The rowan plan is a modification of the HALSAY PLAN.It also guarantees the minimum time wages and does not

penalized a slow worker .A standard time is fixed for completion of a job and bonus is

paid to a worker on the basis of time saved .Here , the bonus is that proportion of wages for the time

taken which the time saved bears to the standard time . Efficiency is thus measured as,

Time Saved / Standard Time As the time saved increases, time taken will be reduced and

as such the bonus would increases at a diminishing rate .This will check over-speeding and overcome the major

drawback of HALSEY PLAN .

Calculation Of Wages UnderCalculation Of Wages Under Rowan Plan Rowan Plan Standard time (S) = 12 hours Time taken by a work (T ) = 8 hours Rate of wages (R ) = R.s. 9 per hour Total wages (W) = Total wages (W) = T * R + [T * R * Time Saved/Standard Time]T * R + [T * R * Time Saved/Standard Time]

= 8*9 +[8*9* 4/12]= Rs.96

EMERSON’S EFFICIENCY PLANEMERSON’S EFFICIENCY PLAN In this plan, Emerson suggested guaranteed wage

payment to all worker on time rate basis.In addition ,bonus or extra payment suggested to

those who proved be efficient .For determining efficiently , standard output per unit

of time or standard time for the job is determined .Efficiency is to be measured on the basis of

comparison of actual performance with the standard fixed .

Calculation Of Bonus UnderCalculation Of Bonus Under Emerson Plan Emerson Plan

At the efficiency of 66 2/3 % the worker is paid daily wage –rate without any bonus . Bonus increases in direct proportion to the increase in efficiency beyond 100 % . It implies that there is 1% increases in bonus with 1% increase in efficiency beyond 100% .

BEDEAUX POINT PLANBEDEAUX POINT PLANIn this plan, the standard time and time taken for each task is

reduced to minutes and each minute is referred as a B point .There is a standard unit known as B for all types of work in

factory . The basic purpose of this plan is that no worker should be

penalized in terms of earning when he is shifted from one department to other in same factory .

Under this plan , a workers receives only wages if he takes more tome than the standard time . In case he saves time , the benefit is divided between the workers and the employer in the ratio of 3:1 . ( 75% -25%).

Calculation Of Wages UnderCalculation Of Wages Under Bedeaux Plan Bedeaux Plan Standard time (S) = 300 Bs ( 5 hours )Time taken by a work (T ) = 240 Bs (4hours ) Rate of wages (R ) = R.s. 8 per hour 60 Bs = 1 hour

Total wages (W) = T * R + 75% of (S-T) * R Total wages (W) = T * R + 75% of (S-T) * R

= 5*8 + 75% * ( 5- 4) * 8= Rs.46

INDIVIDUAL INCENTIVE PLANINDIVIDUAL INCENTIVE PLAN BASED ON PRODUCTIVITYBASED ON PRODUCTIVITY

TAYLOR’S DIFFERENTIAL WAGESTAYLOR’S DIFFERENTIAL WAGES PLANPLAN

F. W .Taylor , he father of the scientific management , propounded the differential wage plan for determining the remuneration of workers .

He believed that standard time can be fixed for standard task.

He suggested two piece rates .If a worker does not perform the standard task within

standard time , he is paid lower piece rate . In case he does the standard work within time . He is paid the higher piece rate.

There is no provision of minimum wages in method .The main objective of Taylor was to motivate the workers

for achieving the standard laid down.

Total earning of A = 12*5Total earning of A = 12*5 = R.s. 60/-= R.s. 60/-Total earning of B = 9*4Total earning of B = 9*4 = R.s. 36/-= R.s. 36/-

Calculation Of Wages UnderCalculation Of Wages Under Taylor’s Plan Taylor’s Plan Example :-The standard task is to produced 10 units in 8 hours . the piece rate per uint is R.S. 5/- for the workers who achieve the set standards and R .S. 4/- for those who does not reach the standard .Let us suppose A produces 12 units in 8 hours , b produces 9 units 8 hours . the total earnings would be -

Merrick’s Multiple Piece Rate PlanMerrick’s Multiple Piece Rate Plan

In this plan an attempt has been made to improve upon the Taylor ‘s differential wage plan .

There are three piece rate in this plan instead of twoas in Taylor’s . This plan divided the workers into three categories viz : beginners ,

average workers and first class workers.The wages for these categories are determined as follow:

category of workers

Performance of standard task

Wage rate

Below average Below 83% Basic piece rate Average workers 83% - 100% 110% of basic

piece rateFirst class workers Above 100% 120% of basic

piece rate

Gantt's Task And Bonus PlanGantt's Task And Bonus Plan

This plan is also an attempt to remove the drawbacks of Taylor ‘s differential wage plan.

Under this,a minimum wages are guaranteed to the workers.

However, the efficient workers are paid bonus ranging between 20-50 % as a fixed % of the time taken .

If a worker finishes his job within the standard time ,he is paid bonus @ 20% of the time taken .

If the worker completes his task in less than the standard time ,then he is paid at higher piece rate in respect of total output .

GROUP INCENTIVE PLANS GROUP INCENTIVE PLANS

PRIESTMAN’S BONUS PLANPRIESTMAN’S BONUS PLAN

This plan provides for groups bonus instead of individual bonus . In case the enterprise is able to achieve the standard proportion or exceeds it, then all the workers are paid the increased bonus in proportion to overall increased in output .

PROFIT SHARING SCHEME PROFIT SHARING SCHEME

The profit of an organization is only the result of the efforts of the management alone . The workers also play a significant role in the earning of profits . So the workers are entitled to share the profits of the organization . The share in the profits is determined according to the agreement between the management and the workers . Thus the workers get share in profits in addition to the normal remuneration.