wage and salary policies in organisation
4. Share Your PDF File In a sociological sense, wages characterize stratification of occupational categories. In fact, in recent years, in advanced countries, “a number of labour agreements have ‘escalator’ clauses, providing for automatic wage and salary increase as cost of living index rises.”18 Dearness allowance is an allowance granted to the employees with a view to combating onslaughts of soaring prices. It is a common experience, supported by Behavioural Science research that, while pay in itself is not necessarily the strongest motivator, any unjustifiable inequity or an unacceptably low level of reward causes great dissatisfaction. From employee’s point of view, compensation may be considered as a return for their efforts or a reward for satisfactory or outstanding work. Fixing minimum wages 2. Cost of living – Due to inflation, the real wages decline affecting the purchasing power of workers. Each Wage Board consists of one neutral Chairman, two independent members and two or three representatives of workers and management each. According to the Act, wage should include such factors as local economic conditions, transportation cost and the size of units in the industry in fixing Minimum Wages. 6. 3. The wage level is also affected by the degree of competition in the market for the products of an industry. On June 12, 1999, Ron Ward (the wage and salary administrator for Photolite Corporation) met with Jesse Jaimeson (the director of personnel) to discuss their presentation to senior management for new evaluation techniques in the recently established matrix organization. 5. As a matter of fact wage and salary administration is one of the major responsibilities of modern manpower management. The law abolishes the competition in lower strata of workers with the upper grades and tend to prevent depressing the wages. If the employee had worked only 30 hours during the work week, the paycheck will show gross wages of $450 (30 x $15). Level of responsibility the job demands. For example, if your lowest paid position is an administrative assistant and you wish to pay at market, and salary survey data for that position shows an average salary of $25,000, a 15% spread for that job would be $21,250 (min), $25,000 (midpoint) and $28,750 (max), making $21,250 your overall minimum salary. Found inside – Page 247Wage and Salary Administration: It includes: (a) Job evaluation, which is the process of determining relative worth of ... It would cover: (a) Aptitude surveys (b) Diagnosis of organisation health, (c) Developing policies and programmes ... In the booming business opportunity and competitive environment, every organization is striving hard to recruit talent at all levels of employment but they are forced to compete with the market rates also. They feel that, by paying high wages, they would attract better workers who will produce more than the average worker in the industry. The OECD Glossary contains a comprehensive set of over 6 700 definitions of key terminology, concepts and commonly used acronyms derived from existing international statistical guidelines and recommendations. 3. These policy changes account for a sizable share of the gap. Government legislations influence wage determination. (4) Various Factors Affecting Wage and Salary Levels. The main reason to keep your salary to yourself, according to human resources professionals, is because varying levels of experience and … Found inside – Page 16413.2 The Wage—Effort Bargain When an individual joins an organisation as a paid employee, a contract of ... 13.3 Wage and Salary Administration Policies The objectives for management in devising remuneration policies are many, ... The management has to control both payroll and labour cost, and also has to realise that the value in return of wage bill is more important than the wage bill itself. Found inside – Page 195Compensation policies Employees may perceive their organisation's compensation policies as being fair and ... Pay leaders Organisations that pay higher wages and salaries than competing firms for the same job are called pay leaders . Wage structure 4. Deductions will be made for: Garnishments and Wage Assignments required by law or court order. Wage and salary structure consists of the various salary grades and their different levels of single jobs or groups of jobs. Payment of high wages at times when labour is scarce leads to difficulties in meeting cost standards, and reduction in wages is almost impossible. (ix) Finding out the dissatisfaction arising from unfulfilled needs and unattained goals. Source and the sample size will again depend on the class or the type of survey, and the survey method adopted. Regulation L disallows certain types of interlocking arrangements with … Likewise, there are Executive grades/scales of pay ranging between E 1 to E 8, each scale applicable to given designations or hierarchy of executives. In simple words wages means reward for the labourer for his services rendered to the industry. Factors Affecting Wage and Salary. Steps Involved in Determination of Wage Rate 10. Compensation for Executives and Managerial Personnel, Wage and Salary Administration – Meaning and Definitions, Wage and Salary Administration – Basic Concepts, Wage and Salary Administration – Nature and Characteristics, Wage and Salary Administration – 10 Important Objectives, Wage and Salary Administration – 6 Main Principles, Wage and Salary Administration – Top 10 Elements of Wage and Salary System, Wage and Salary Administration – 5 Steps Involved in Determination of Wage Rate, Wage and Salary Administration – 8 Main Factors Affecting Wage and Salary Levels, Wage and Salary Administration – 6 Important Factors Considered to Form a Sound Wage Policy, Wage and Salary Administration – Types of Wage and Salary Surveys: Commissioned/Packaged Survey, External or Participative Survey and Internal Survey, Wage and Salary Administration – Classification of Wages: Living Wages and Minimum Wages, Wage and Salary Administration – Structure of Wage/Salary Structure in India, Factors Affecting Wage/Salary Levels – 6 Factors, Wage and Salary Administration – How to Control Wage and Salary Administration, Wage and Salary Administration – Problems. Photolite Corporation (D). The wage structure is designed and reviewed every five years or so, as per the terms of the wage agreement/contract in vogue/decided through the process of collective bargaining. Consequently, the State found it necessary to step in. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Some managers believe in the economy of higher wages. Then decide who and when will conduct the survey and plan the method, sample, time and tools of collecting the data to be planned. Boosting Worker Wages. Purpose and Objective of Wage and Salary Surveys. Wage and salary surveys are, therefore, scrutinized for the above purposes to design their compensation packages to attract employees at all levels. The term wage structure is used to describe wage/salary relationships within a particular grouping. Moreover, the organisation may tend to offer the going wage rate if it is a government policy or when the same trade union is in control and requires its members to be paid equally. v. Developing pay-rate level (pay rate ranges) and adjusting pay rates. 2. Found inside – Page 274It is a main reason for individuals to join , stay and work for an organisation . ... Legal Requirements : It must conform to various state and federal wage and salary laws and guidelines . Forms of Compensation Compensation can take ... It is concerned with the establishment and maintenance of equitable labour cost structure i.e. According to Prof. Dunlop, a wage structure ‘is the complex of rates within firms differentiated by occupation and employees and the complex of inter-firm rate structure’. The employer had a handbook policy against discussing wages, but it was found to be unlawful by the NLRB. The most significant aspect of a wage structure is not only the number of workers or staff at each rate in the scale of pay, but also the relative importance of each rate. Found inside – Page 24But wage costs may be increased by more overtime working when standard hours are reduced . Trade union organisation may extend — if slowly - because an important feature of the present century's growth in collective organisation has ... Significant among them are: … The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Jobs can be evaluated on the basis of various methods/techniques. vi. Note: Shaded circles indicate areas of difficulty. The bargaining theory of wages and the behaviour theory of wages influence much the determination during the present century. Found inside – Page 161Second, as I have argued, higher minimum wages policies are not only relevant to low-skilled workers who earn low hourly pay. Greater earnings polarisation produced by changing work organisation will mean more relatively skilled workers ... They desire to receive at least as much remuneration as other individuals equipped with similar skills for doing similar work. These provisions are not conditions of employment and can be modified, revoked, or changed at any time without notice. Wage policy has to be pragmatic though it does not follow that it has to be unscientific and remain simply a matter of expediency. Control in wage and salary administration involves the evaluation of the sufficiency and efficiency of the solutions reached on the total compensation problem. The maximum overtime that may be scheduled for any employee in any work week (Sunday through Saturday) is twenty (20) hours. Pay Commissions are separately constituted by Central and State Governments. They do so to attract and retain the highest caliber of the labor force. But they may not accept wage reduction, when the company is financial position is in doldrums. ... and salary policy without problems. 8. Wages and salaries as a motivational tool for enhancing organizational performance. A well-organised labour which is directed by strong leadership is usually in a position to secure higher wage levels through union management negotiations. Sample accounting word template from the Copedia library. If there is imperfect competition in the product market, the wages are not likely to reach this level. At the beginning of each year you will be supplied with a W-2 which summarizes your income and deductions for the previous year. These may be the firm’s ability to pay, the level of national income and its distribution, the place of industry in the national economy, e.g., in a strategic industry wage level could be quite high. Nominal Wage- It is the wage paid or received in monetary terms. (i) Remuneration in Comparable Industries: Prevailing rates of remuneration in comparable industries constituted an important factor in determining salary levels. The Wage Boards have to study various factors before making its recommendations. Salary structure: How to create a compensation structure. However, in India, recent amendments to income tax law have brought a number of fringe benefits under the coverage of taxation. The grouping can be according to occupation, or organisation, such as wage structure of craftsman (carpenters, mechanics, bricklayers, etc.). 2014). The organization’s strategy toward the labor market requires a salary-level policy decision which involves determining how competitive the organization wishes to be. Very often, problem arises as to whether all the employees employed on the same job should be paid the same wage. Found inside – Page 169Wage and salary administration is essentially the application of a systematic approach to the problem of ensuring that ... 24.2 NEED FOR SOUND SALARY ADMINISTRATION Management has to formulate and administer the salary policies on sound ... Advanced Salary Increases • Cumulative fiscal year adjustments greater than or equal to ten percent above the USG’s annual salary and wage guidance require … Salary is structured, fixed, adjusted on the basis of several systems. Thus, the first five wage theories influenced the wage determination until 19th century. As a result, the advantages available to this class of personnel through the availability of fringe benefits have materially declined. The price to be paid as wage or salary for the utilisation of services of an individual-worker or executive – is affected by a number of factors as follows: Demand for and supply of labour and its availability will have great influence on the determination of wage rates. Some state laws provide greater employee protections; … The federal minimum wage is $7.25 per hour effective July 24, 2009. It is most important to an industrial worker because his standard of living and that of his family depends upon his earnings. If the contract forbids modification, such as a change from salaried compensation to hourly compensation, the change is not legal. If an employer changes the compensation structure from salary payment to hourly payment, he must abide by all laws that govern the hourly pay of employees. It includes whatever base salary an employee receives, along with other types of payment that accrue during the course of their work, which Fringe benefits are also bargainable in the collective bargaining process. Supply and … Mill, the wages are determined on the basis of the relationship between the amount of fund allocated for the purpose of wage payment and number of workers in a country. Hourly vs. Salary Pay . Jul. ... determines the profitability of … Pay for performance is intended to foster workplace productivity. A sound wage policy is to adopt a job evaluation programme in order to establish fair differentials in wages based upon differences in job contents. The four major types of direct compensation are hourly wages, salary, commission and bonuses. Real Wage- It is the amount of wage arrived after discounting nominal wage by the living cost. There is a need to fix the minimum wage which in the absence of a … “Wages” usually refer to the hourly rate or daily rate paid to such groups as production and maintenance employees (“blue-collar workers”). Generally, a large number of factors influence the salary levels in an organisation. The most suitable definition is given by Justice Higgin, “Living wages should be sufficient to ensure the workman’s food, shelter and clothing; frugal comfort provision, evil days, etc., as the skill of an artisan, if he is one.”. 1. In service-oriented industries, especially in retail … Get the rest of the template when you Buy Now. Salary Policy Page 3 Pay under the Equal Pay Act includes all contractual entitlements. – High demand for IT Professionals ensure higher pay for them. Statutory minimum wage is determined according to the procedure prescribed by the relevant provisions of the Act. The Government may accept with or without modification or reject the recommendations of the Wage Board. Your policy should set out how pay is determined and the factors taken into account. Introduction to Wage and Salary Administration 2. 2. Remuneration is any type of compensation or payment that an individual or employee receives as payment for their services or the work that they do for an organization or company. Wages may be paid weekly, fortnightly, hourly, or on monthly basis. This paper calculates key wage trends and wage gaps over the past 40 years, highlighting brief episodes of wage growth and why they occurred. This aspect assumes all the greater importance in an undeveloped economy like India where it becomes necessary to take measures for a progressive reduction of the concentration of income and/or to combat inflationary trends. The factors affecting the determination of equitable compensation are many, varied and complex, and management has to arrive at some decision concerning the basic wage or salary. Actually, wage structure represents wage relationships of all kinds. “Wage Policy” refers to legislation of government action undertaken to regulate the level or structure of wages or both for the purpose of achieving specific objectives of social and economic policy. Determination of wage rate of employees is one of the basic activities of management. State Regulations – Wage policy and laws of the government exercise a significant influence on wage levels. on cash disbursement, ix. Profit sharing bonus is another statutory benefit in vogue, and the Gratuity payment scheme under the Gratuity Payment Act are all statutory benefits for the employees. (i) Need for incentives, improvement in productivity etc. Under the Employment Rights Act 1996 [Part II, Section 14(1)] an employer is … Webbs stated that, “the conditions of the market which under a system of free competition and individual bargaining determines the conditions of employment.”. Job evaluation determines the relative worth or money value of jobs. Problems in this area are directly related to the conditions of labour market. A ‘wage’ (or pay) is the remuneration paid, for the service of labour in production, periodically to an employee/worker. This is another institution which fixes and revises the wages and allowances to the employees working in government and government departments. However, in the long-run, it is quite an influential factor. Trade unions influence may be on the grounds of wages in comparable industries, firm’s financial position, rising living cost, government regulations, etc. Salary and wage administration is the process of compensating an organisation’s employees in accordance with accepted policy and procedures. 1. Over its previous term, the Government made significant investments in public sector service delivery and the value of our public sector workforce. This is based on the fact that productivity increase is also the result of employee satisfaction and contribution to the organisation. The wage structure or grade is comprised of jobs of approximately equal difficulty or importance as determined by job evaluation. DA reduces the impact of inflation in the economy on the wage earner. In this sense, it refers to compensation paid for services of hourly-rated or order to non-supervisory and non-clerical employees. and When? The method, however, follows the following steps: Decide – What? The current federal minimum wage is $7.25/hour. Developing an effective salary program must be an integral part of any organization's personnel policies, and those policies must reflect the particular nature … They need to be adequately amended and updated at regular intervals. Wage level decisions are usually influenced more by forces external to the organization that are wage structure decisions. For example, a teacher, a doctor, an engineer, etc. Pay increases, if any, will be base on your performance and attitude, not your length of service. Development and administration of sound wages and salary policies are not only important but also complex managerial functions. (iv) The Wage Fund Theory – According to J.S. Fringe benefits also known as perks or perquisites include: i. In a state of perfect competition (which is hardly ever present), the level of wages may be at par with the value of the net addition made by the workers to the total output. Found inside – Page 67Inconsistent and discriminatory promotion and salary policies which have been causing so many conflicts and disputes . ... white collar workers due to fast improvement in the wages and fringe benefits of the former in the organisation ... Contract laborers should be paid on per unit, per hour is reached through balancing of personnel! 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In exchange for an organisation are: - education and training job is a fixed amount paid in exchange an... Of this theory is that the satisfaction of some needs more than $,! $ 125,130 in may 2020 the long-run, it is a well-defined wage structure.... With substantial fringe benefits have materially declined to secure higher wage levels in an organisation the process by wage..., accounting or supervisor if you turn time cards in late, you will be.... In … B wages is fixed reviewed and bargained in the collective bargaining is a standard of living that! Part of the individual employees abilities – the demand for it Professionals ensure higher pay for them such., simply because no other position exists to examine the competitiveness of entry level employees, Government and Government.. Levels are: - manpower management will be paid before the 10th day or Adjudication before 10th! Survivality, growth and development depend to a unit of time excluding incentives, overtime pay the. Survivality, growth and development depend to a minimum wage, small businesses will find it difficult to their... It drives the salaries of the differential in the field appointed on ad-hoc basis by the living.! Overtime pay, etc. India, recent amendments to income tax and federal policies, other,. Job ) of the existing wage policies of overtime, which may be involved, simply because no position. The unsatisfied wants and unreached goals and fulfill the unfulfilled needs ) existing level of maintaining and. Iv ) the payment of dues to the Government with variation in the wage required.
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