Behavioral theory – Wage theoriesCompensation Management

Prepared By

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Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

Behavioral theories• Many behavioural scientists

— notably psychologists and sociologists- like March and Simon, Robert Dubin, Eliot Jacques—have presented their views on wages and salaries on the basis of research studies and action programmes conducted by them.

Behavioral theories• It has been found that wages

are determined by such factors

as . size and prestige of the

company, strength of the

union, the employer’s concern

to maintain the workers,

contribution by different kinds

of workers, etc.

Behavioral theories• Wage differentials are

explained by social norms, traditions, customers prevalent in the organisation psychological pressures on the management, prestige attached to certain jobs in terms of social status, need to maintain internal consistency in wages at the higher levels, the wages paid for similar jobs in other firms, etc.