SEMINAR

WAGE AND SALARY ADMINISTRATION

Lijin MathewMBAMCMAT

Why wage and salary administration in an organization Main objective is to have a scientific, rational and balanced

wage & salary structure In salary administration, the employer should not feel

employees are getting more money than they deserve and employees should not feel they getting lower money than they deserve

Wage and salary administration includes allowances, leave facilities, housing, travel, etc. and non-cost rewards such as recognition, privileges and symbols of status

Objectives

To establish fair and equal compensation To attract competent personnel To retain the present employees To control labor and administrative cost To improve motivation and morale of employees To project good image for the company

Principles of wage and salary administration

It must be flexible Job evaluation must be scientific It must consistent with overall plan of the

organization It must be according to the social and economic

objective of the organization It must change according to the local and national

conditions It must simplify and speed up the administrative

process

Difference between wage, salary and compensation Wage : Paid to blue-collar workers- paid daily,

weekly or monthly- paid for the jobs which can be measured in terms of money’s worth to some extent

Salary : Paid to white collar workers-paid monthly- paid to employees whose contribution cannot be easily measured

Compensation : a comparative term- includes wage and all other allowances and benefits like allowances, leave facilities, housing, travel and non-cost such as recognition, privileges and symbol of status

Types of compensation and wages

Compensation Base compensation : Payment made to

employees in the form of wage and salaries, It is a fixed and non-incentive payment based on the basis of time spent in the job

Supplementary compensation : Incentive payment based on the actual performance of employee

Wages Minimum wage : Compulsory wage paid to

employees irrespective of the financial status of the organization. It should be calculated based on the minimum food requirements, cloth requirements, rent to live in a particular area, standard of a working class family and fuel, lighting and other needs

Fair wage : Wage above minimum and below living wage. It is decided based on productivity of labor, prevailing rates of wages, level of national income and the capacity of employer to pay

Living wage : It provides basic needs of life. It should meet medical, education and retirement needs and it is paid according to the efficiency of worker

Factors influencing wage and salary

Wage policy of the company Job needs Ability to pay Cost of livings Prevailing wage rates Unions State regulations Demand and supply of labor Economic conditions of the nation

Methods of wage payment1. Time wage system : The workers id paid based

on the time spend on the work irrespective of the work done. It may be based on hour, day, week or month worked. It is the oldest method of wage payment It is issued in following kind of orgns

Quality is more important than quantityMeasurement of work is not easyWork requires high degree of skill and dexterity When efficiency of work can be measured only by

close supervision

Merits It is simple to understand and easy to operateWorkers are assured of guaranteed minimum

wage irrespective of outputSuitable for beginners It is advocate by trade unions

Demerits It do not make any differentiation between

efficient and inefficient workers It does not have provision for offering

incentives to efficient workersManagement should spend more on supervisionThe system is unfair as wage and productivity

are not correlated

2. Guaranteed time rates : The wage is paid according to the time rate and its adjusted according to the cost of living.

3. Piece rate system : The workers are paid at a stipulated rate for per unit of output. Payment is based on speed, This method is applicable

Quality of work is not important Work is of a repetitive nature There is sufficient demand for output to guarantee continuous work

Merits It provides encouragement for high productivity The workers will adopt better and more efficient methods Idle time will be reduced to minimum The cost of supervision is less

Types of piece rate systema) Straight piece rate system : Paid according to fixed amount

per fixed units produces irrespective of time takenb) Piece rate with guaranteed time rate: Workers are paid

minimum wages on the basis of time rate plus paid for number of units produced

c) Differential piece rate system : The rate per piece is increased as the output level gets increased. The increase in rates may be proportionate to the increases in output

Legal frame work on wages

The payment of Wages Act 1936 The minimum wages Act 1948 The companies Act 1956 The payment of Bonus Act 1965 The equal remuneration Act 1976

Thank you………..