La problemática terminológica

Wage and salary Administration is essential application of a systematic approach to the problem of ensuring that employees are paid in a logical, fair and equitable manner. The payment of wages and salary is an inbuilt system with human force for their activity performed.

To what extent the payment of wages & salary is reasonable and adequate in consonance to the nature of the work performed.

The payment of wages and salary is an inbuilt system with human force for their activity performed. The supply of labor is more than the demand and with the result there is exploitation of cheap labor policy. Later the advent of trade unionism helped to improve the working conditions of labor. Until Second World War, event the government adopted a “LAISSEZ- FAIRE” policy in this regard. It was as late as in 1947, which the industrial unrest becomes so uncontrollable that a tripartite conference was convened of

(1) Central and state govt.

(2) Employers

(3) Employees which resulted in Industrial trade resolution.

The basic purpose of wage &salary administration is to establish and maintain an equitable Wage & salary structure.

The secondary objective is to establish and maintenance of equitable labour –cost i.e. an optimal balancing of conflicting personnel interests so that satisfaction of employer and employee is maximized.

It is concerned with the financial aspects of needs, motivation and rewards. Managers, therefore, analyze and interpret the needs of their employees so that rewards can be individually designed to satisfy these needs.

The first and the most important problem in wage and salary administration is the establishment of base compensation for the job. This problem is enormously complicated by such factors as Supply and Demand, Labor organization, the firm’s ability to pay, Variations in productivity and Cost of living, Government legislation, Including CIVICS RIGHTS ACT.

In order to attract and retain needed personnel for the organization, employees must perceive that compensation offered is equitable in relation to their inputs and relative contributions. The most likely to be used method to solve this problem at present would be job evaluation, a systematic and orderly process for establishing the worth of job.

The importance of a pay system to an event of major importance to employees and its effects upon them cannot be ignored. It is a valid system if it results in a structure acceptable to both employee and employer. In general, structures that are internally and externally consistent have the greatest chances of affecting overall satisfaction. Under reward, Over-reward and inconsistency of reward not only tend to lead to lower satisfaction but encourage behavior that often proves dysfunctional to organizational objectives. A sound, systematic, consistent system of compensation determination will do much to promote equity and satisfaction, provided that such a system is understood and accepted by most employees.

NEED FOR THE WAGE AND SALARY ADMINISTRATION:

Wage and salary administration is very much needed in an organization.

• Reward employees according to efficiency and merit.

• Attract and retain the services of desirable employees.

• Get improved employee morale and productivity.

• Keep labor cost within reasonable limits so as to safe guard the interests of shareholders, competitive worth of the organization and its product and profitability.

• Helps the employees to compare the pay of different employees with their skill, knowledge, performance etc.

SALARY

Fixed periodical payment to a person doing other than manual or mechanical work. It refers to monthly rate of May, irrespective of the number of hours put by an employee.

WAGES:

Payment paid for manual and mechanical work is wages. Represents hourly rates of pay.

“wages means all remuneration, capable of being expressed in terms of money which would if the terms of the contract employment express or implied ,were fulfilled ,be payable to a person employed in respect of his employment or of work done in such employment”.

OBJECTIVES OF WAGE AND SALARY ADMINISTRATION:

The objective of wage and salary administration is numerous and sometimes conflict with each other.

1) TO ACQUIRE QUALIFIED COMPETANT PERSONNEL :

Candidates decide upon their career in a particular organization mostly on the basis of the amount of remuneration the organization mostly on the basis of the amount of remuneration the organization offers qualified and competent people join the best paid organization. As such the organization should aim at payment of salaries at that level where they can attract competent and qualified people.

2) TO RETAIN THE PRESENT EMPLOYEES :

If the salary does not present compare favorably with that of other similar organization. Employees quit the present one and join the other organization. The organization must keep the wage levels at the competent level, in order to prevent quite.

3) TO SECURE INTERNAL AND EXTERNAL EQUITY :

Internal equity does mean payment of similar wages for similar jobs within the organization. External equity implies payment of similar wages to similar jobs in comparable organization.

4) TO ENSURE THE DESIRED BEHAVIOUR :

Good rewards reinforce desired behavior like performance loyalty accepting new responsibilities and changes etc. to keep labor and administration costs in line of the organization to pay. To protect in public as progressive employers and to comply with the wage legislations. To pay according to comply with wage legislations. To pay according to the content land difficulty of the jobs and in tune with the effort and merit of the employees.

To facilitate pay role administration of budgeting and wage and salary control. To simply collective bargaining procedure and negotiations. To promote organization feasibility.

SYSTEMS TO ACHIEVE THE OBJECTIVES:

The objective is achieved by the use of the following systems:

JOB EVALUATION:

All the jobs will be analyzed and graded to establish the pattern of internal relationships. It is the process of the determining relative worth of jobs. It includes suitable job evaluation techniques classifying jobs into various categories and determining relative value of jobs into various categories.

WAGE AND SALARY RANGES:

Over all salary range for all the jobs in an organization is arranged. Each job grade will be assigned salary range. These individual salary ranges will be filled into an overall range.

WAGE AND SALARY ADJUSTMENTS:

Overall salary grades of the organization may be adjusted on the data information collected about the salary levels of similar organizations. Individual salary may also be adjusted based on the performance of the individual employees.

PRINCIPLES OF WAGE AND SALARY ADMINISTRATION:

There are several principles of wage and salary plan, policies and practices. The important among them are:

 Wage and salary plans and policies should be sufficiently flexible.

 Job evaluation should be done scientifically.

 Wage and salary administration plans must always be consistent with overall organizational plans and programmes.

 Wage and salary administration plans and programmes should be in conformity with the social and economic objectives of the country attainment of equity in income distribution and controlling inflationary trends.

 Wage and salary administration plans and programmes should be responsive to the changing local and national conditions. These plans should simplify and expedite other administrative process.

ELEMENTS OF WAGE AND SALARY ADMINISTRATION:

 Wage and salary system should have relationship with the performance, satisfaction and attainment of goals of an individual. Henderson identified the following elements of wage and salary administration.

 Identifying the available salary opportunities, their costs, estimating the worth of its members of these salary opportunities and communicating them to employees.

 Relating salary to needs and goals.

 Developing quality, quantity and time standards relating to work and goals.

 Determining the effort necessary to achieve standards.

 Measuring the actual performance.

 Comparing the performance with the salary received.

 Measuring the job satisfaction gained by the employees.

 Evaluating the unsatisfied wants and un reached goals of the employees.

 Finding out the dissatisfaction arising from unfulfilled needs and unattained goals adjusting the salary levels accordingly with the view to enabling the employees to reach unreached goals and fulfill the unfulfilled needs.

WAGE INCENTIVES:

Wage incentives are extra financial motivates. They are designed to stimulate human effort by rewarding the persons, over and above the time rate remuneration for improvements in the present or targeted results.

TYPES OF INCENTIVES PLANS:

HALSAY SYSTEMS:

Under this system a standard time is fixed for the completion of job if the worker completes the job in less than the standard time the time actually spent on the job he is paid at hourly rate plus a bonus for the time saved.

ROWAN SYSTEM:

Under this system, a standard time is allowed for job and a bonus is paid for time saved. The bonus is percentage of the workers part at a hourly basis. The percentage being equal to the proportion the proportion the time saved bears to standards is attained.

TAYOR DIFFERENTIAL PIECE RATE SYSTEM:

This has a piece rate for output below standard and a piece rate per open above standard with a bonus of 50% of the hourly rate of wages when standard is attained.

MERRICK DIFFERENTIAL PIECE RATE SYSTEM:

Straight piece rates are fixed up to 83% of standard o/p at which a bonus of 10% on

GRANT TASK SYSTEM:

Under this system for open below standard, the worker gets a guaranteed minimum hourly rated, on reaching standards o/p, he gets 20% bonus, for outputs exceeding the standards high piece rates are paid.

Prevailing rates of remuneration in comparable industries constituted an important factor in determining the salary levels. The organization in the long run must pay at least equal to the going rate for the similar jobs in the similar organization.

FIRM’S ABILITY TO PAY:

One of the principle considerations is the firm’s ability to pay. The firms should be able to pay the same even at the tough situation (loss).

COST OF LIVING:

The cost of living is another important factor that influences the quantum of salary the employees expect that their purchasing power be maintained at least at the same level. If not increased by adjusting wages to changes in cost of living.

PRODUCTIVITY:

An interesting development in wage determination has been productively standard this is based on the fact that productivity increase is also result of employees.