ByNishant 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.Mukesh Ambani, Asias richest man, took a 66 percent pay cut to set a personal example of moderation after Indias government called for austerity in salaries of executives.Unhappy with pay hike, IIT-M faculty begin strike today

Concept of Wage and Salary Administration

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

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

Important DefinitionsCompensation: 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

The Wage determination Process

The Wage Determination ProcessDiagramThe Process of Job AnalysisWage SurveysRelevant Organisational ProblemsPreparation of Wage StructureWage 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)

The Wage Line/ Wage CurveThe wage lineThe 6th Pay commission Report

Factors Influencing Wage & Salary Structure & AdministrationThe Organization's ability to paySupply & demand of labourThe prevailing market rateThe cost of livingLiving wageProductivityTrade Unions Bargaining powerJob requirements

Continued.Managerial attitudesPsychological & Sociological factorsLevels of Skills available in the market

Administration of Wages & Salaries

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 structureHelp in formulation of wage policies from time to timeCo-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.

Principles of Wage & Salary AdministrationDifferences in pay should be based upon variations in JOB REQUIREMENTSWages should be in line with that prevailing in the labour marketEqual pay for equal workThere should be recognition of individual differences in ability and contributionThere should be established structure for redressal of wage complaintsWages should ensure a reasonable standard of living for the worker and his familyThe wage structure should be flexibleWAGE COMMITTEE should be appointed for revision of wages

Theory of WagesSubsistence TheoryThe Surplus Value Theory of WagesResidual Claimant TheoryMarginal Productivity TheoryThe Bargaining Theory of WagesBehavioural Theories: The Employees Acceptance of a Wage Level,The Internal Wage Structure,Wage & Salaries & Motivators

Minimum, Fair & Living Wage

Minimum, Fair & Living WageStatutory Minimum WageBare or Basic Minimum WageA Minimum WageLiving WageFair WageThe Need-Based Minimum Wage

Types of WagesTime RatePiece RateBalance or Debt Method

Wage Differentials

Why the salaries offered in Bangalore and Pune are different in spite of the same job profile?Occupational DifferentialsInter-firm DifferentialsInter-area or Regional DifferentialsInter-Industry DifferentialsPersonal Wage Differentials

Wage Differentials inIndiaIn the unorganized labour market, personal differences tend to existThe tendency appears to be towards the elimination of wage differentialsWage differentials by sex are quite commonThere has been a tendency towards the elimination of inter-firm differentials

Executive Remuneration

EXECUTIVE RENUMERATIONUNIQUE FEATURES OF EXECUTIVE RENUMERATIONCannot be compared towage schemes of other employeesCannot form unionsSecrecyNot based on individual performance but on organizational performanceSubject to statutory ceilings

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

Some generalizations related to executive compensation:Satisfaction with pay is a function of comparison with anothers payA managers satisfaction with his current income and its motivational effect appear to be directly related to Anticipated pay raisesThe choice of merit, as opposed to seniority, as the basis for determining salary rates tends to increase with education and positionThe actual determinants of pay differentials seem to be job level supervisory experience and professional experienceManagerial incentive compensation has tended to become flexible

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