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Wage and Salary Administration

Wage and Salary Administration. By Nishant Singh(8360) Ameya Joshi(8156). News in the views…. Corporate Affairs Minister Salman Khurshid, who yesterday favoured trimming pay packets of India Inc CEOs,earnestly advised them to lead a simple life saying.

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Wage and Salary Administration

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  1. Wage and Salary Administration By Nishant Singh(8360) Ameya Joshi(8156)

  2. News in the views…. • Corporate Affairs Minister Salman Khurshid, who yesterday favoured trimming pay packets of India Inc CEOs,earnestly advised them to lead a simple life saying. • Mukesh Ambani, Asia’s richest man, took a 66 percent pay cut to “set a personal example of moderation” after India’s government called for austerity in salaries of executives. • Unhappy with pay hike, IIT-M faculty begin strike today

  3. Concept of Wage and Salary Administration

  4. Concept of Wage and Salary Administration • Refers to the establishment & implementation of sound policies and practices of employee compensation • Includes areas as Job Evaluation, Surveys of Wages & Salaries, Establishing rules for administering wages, Profit Sharing, Wage changes & adjustments, Supplementary payments, Control of compensation costs

  5. Purpose • To establish & maintain an equitable wage & salary structure and an equitable labour-cost structure. Other objectives include: • To recruit persons for a firm • To control payroll costs • To satisfy people, to reduce the incidence of quitting grievances, & fractions over pay, & • To motivate people to perform better

  6. Important Definitions • Compensation: Money received in the performance of work , plus the many kinds of benefits and services that organisations provide their employees. • Wages (or PAY) The remuneration paid, for the service of labour in production, periodically to an employee • Difference between Wages and Salary Wages: Hourly/daily rate, blue collar workers Salary: weekly/Monthly rates, white Collar workers

  7. The Wage determination Process

  8. The Wage Determination Process • Diagram • The Process of Job Analysis • Wage Surveys • Relevant Organisational Problems • Preparation of Wage Structure • Wage Administration Rules: (advancement will be based on Merit or length of service? Frequency of pay increases? Information to be given to employees? Employee appraisal, fixing of wages)

  9. The Wage Line/ Wage Curve • The wage line • The 6th Pay commission Report

  10. Factors Influencing Wage & Salary Structure & Administration • The Organization's ability to pay • Supply & demand of labour • The prevailing market rate • The cost of living • Living wage • Productivity • Trade Union’s Bargaining power • Job requirements

  11. Continued…. • Managerial attitudes • Psychological & Sociological factors • Levels of Skills available in the market

  12. Administration of Wages & Salaries

  13. The administration should be controlled by the Personnel manager or a Committee composed of high ranking executives. • Major functions of such a Committee are: • Approval and/or recommendation to management on job evaluation methods & findings • Review & recommendation of basic wage & salary structure • Help in formulation of wage policies from time to time • Co-ordination & review of relative departmental rates to ensure conformity, and • Review of Budget estimates for wage & salary adjustments & increases The Committee should be supported by information from other, technical staff.

  14. Principles of Wage & Salary Administration • Differences in pay should be based upon variations in JOB REQUIREMENTS • Wages should be in line with that prevailing in the labour market • Equal pay for equal work • There should be recognition of individual differences in ability and contribution • There should be established structure for redressal of wage complaints • Wages should ensure a reasonable standard of living for the worker and his family • The wage structure should be flexible • WAGE COMMITTEE should be appointed for revision of wages

  15. Theory of Wages • Subsistence Theory • The Surplus Value Theory of Wages • Residual Claimant Theory • Marginal Productivity Theory • The Bargaining Theory of Wages • Behavioural Theories: The Employee’s Acceptance of a Wage Level,The Internal Wage Structure,Wage & Salaries & Motivators

  16. Minimum, Fair & Living Wage

  17. Minimum, Fair & Living Wage • Statutory Minimum Wage • Bare or Basic Minimum Wage • A Minimum Wage • Living Wage • Fair Wage • The Need-Based Minimum Wage

  18. Types of Wages • Time Rate • Piece Rate • Balance or Debt Method

  19. Wage Differentials

  20. Why the salaries offered in Bangalore and Pune are different in spite of the same job profile? • Occupational Differentials • Inter-firm Differentials • Inter-area or Regional Differentials • Inter-Industry Differentials • Personal Wage Differentials

  21. Wage Differentials inIndia • In the unorganized labour market, personal differences tend to exist • The tendency appears to be towards the elimination of wage differentials • Wage differentials by sex are quite common • There has been a tendency towards the elimination of inter-firm differentials

  22. Executive Remuneration

  23. EXECUTIVE RENUMERATION UNIQUE FEATURES OF EXECUTIVE RENUMERATION • Cannot be compared towage schemes of other employees • Cannot form unions • Secrecy • Not based on individual performance but on organizational performance • Subject to statutory ceilings

  24. Components of executive remuneration: • Salary: determined through evaluation and serves as the basis for other benefits • Bonus: Related to performance, at a certain percentage of profits • Incentives • Perquisites: medical care, free well furnished accommodation, conveyance, servants, company recreational area; mostly to make up for the taxation

  25. Some generalizations related to executive compensation: • Satisfaction with pay is a function of comparison with another’s pay • A manager’s satisfaction with his current income and its motivational effect appear to be directly related to Anticipated pay raises • The choice of merit, as opposed to seniority, as the basis for determining salary rates tends to increase with education and position • The actual determinants of pay differentials seem to be job level supervisory experience and professional experience • Managerial incentive compensation has tended to become flexible

  26. THANK YOU!!

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