Wage & Salary Mangement

7/28/2019 Wage & Salary Mangement

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Wage and Salary Administration

•

Purpose of Wage and Salary Administration• Concept of different wages• Basic Wage Plans

PIYOOSH BAJORIA



Wage and Salary Administration

• Base wage and salaries are defined

as the hourly, weekly and monthlypay that employees receives fortheir work in an organisation. – Maintain competitiveness in the wage

market – Matching employee expectations

– Maintaining equity in the distributionof wages

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Purpose of Wage and Salary Administration

•

Attracting talented resources• Retaining and motivating

employees

• Financial Management

• Legal requirements

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wage structures in the country

• A tripartite Committee Viz.,"The Committee onFair Wage" was set up in 1948 to provideguidelines for wage structures in the country.

• The report of this Committee was a major

landmark in the history of formulation of wagepolicy in India.

• Its recommendations set out the key concepts of the `living wage', "minimum wages" and "fairwage" besides setting out guidelines for wage

fixation.

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Concept of different wages• Revision

• Revise the Minimum rates at an appropriateinterval of not exceeding five years.

• Variable Dearness Allowance (VDA)

• It was recommended in the Labour Ministers'Conference held in 1988, to evolve a mechanismto protect wages against inflation by linking it torise in the Consumer Price Index. The VariableDearness Allowance came into being in the year1991. The allowance is revised twice a year, onceon 1st April and then on 1st October. In the StateSphere, 22 States/Union Territories haveprovisions for Variable Dearness Allowance, atpresent.

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Concept of different wages2. Fair Wage

Workers performing work of equalskill, difficulty or unpleasantnessshould receive equal or fair wages.

3. Living Wage

This should enable the male earnerto provide for himself and is family

apart from bare essentials frugalcomfort including – Education for children

– Protection against ill-health

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Basic Wage Plans

1. Time Wage Plan

When the quality of work is moreimportant than the quantity andthe nature of work is such that itcannot be easily standardized atime wage system is preferred

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Basic Wage Plans

2. Piece Wage Plan• Workers are paid for the number of

units produced. Hence systemprovides a direct incentive to workersthus conducive to maximizeproduction.

3. Skill Based Pay• Employees are compensated for their

job-related skills.

• Freshers are recruited at belowmarket rate and as they gainexpertise their compensationincreases..

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Basic Wage Plans• Competence based Pay

– Competency can be defined as the

knowledge, skills and behaviour of anindividual that contribute to worker’s

performance.

•

Broadbanding – As a base-pay technique, reduces thenumber of salary levels into broadsalary bands.

– The bands have fixed minimum and

maximum which overlap with otherbands.

– Rs.10,000 – Rs.18,000

– Rs.12,000 – Rs.20,000

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Incentive Plans

• A. Short Term Plans – Halsey Plan

– Standard output is specified needs tobe completed in a prescribed time.

– A worker receives extra wages asextra earnings if he completes the

work before the prescribed time.

– Eg if a worker completes standard output in6hrs than 8hrs , hourly rate =5

Earnings = Plan % x Time Saved x Hourly Rate

Earnings = ½ x2 x5 = Rs.5

Earnings = 30 +5 = 35

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Incentive Plans

2. Rowan Plan• Worker is guaranteed minimum wages on

a time basis – A worker receives extra wages as

extra earnings if he completes thework before the prescribed time.

– Eg if a worker completes standard output in6hrs than 8hrs , hourly rate =5

Earnings = Time Saved x Time Taken x Hourly Rate

_______________________________ Standard Time

Earnings =(2x6x5)/8 = 7.50

= 37.50

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Incentive Plans

• Barth System of wages

• Workers are not guaranteedminimum rate

• Wages=Stand time x Time Taken x Hourly Rate

Wages =8 x 6 X 5

Wages = 6.9 x 5 = 34.50

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Incentive Plans

• Task Bonus System – This method is used for groups.

Emphasis is on team work

• Point-rating System – Each job is rated in terms of time.

– At the end of week output of eachworker is assessed.

– no. of units =80, std. time=8 hrshourly rate= 5rs

– If x makes 100 units

– Now he will get rs.50/-

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Incentive Plans

• Progressive Bonus

• Under this system earningsincreases at a progressive rateonce the output crosses minimumstandard of output.

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Wage & Salary Mangement