Employee Wages and Salary Process

EMPLOYEE REMUNERATION

Wages and Salary Administration

            Wage is compensation to the employees for services rendered to the organization. In case the quantum of services rendered is difficult to measure, then the payment is called salary. Normally the wage period is shorter than the salary period. Payment made to labour is generally referred as wages. Money paid periodically to persons whose output cannot be easily measured, such as clerical staff as well as supervisory staff, is generally referred to as salaries. Salaries are paid uniformly generally on monthly basis and at times the element of incentive is introduced in the form of commission. Incentives are paid to salaries persons in addition to their salaries. However, it is in the area of labour that there are several types of methods of wage payment.

            ILO defined the term wage as “the remuneration paid by the employer for the services of hourly, daily, weekly and fortnightly employees”. It also means that remuneration paid to production and maintenance or blue-collar employees.

            Salary is defined as the remuneration paid to the clerical and managerial personnel employed on monthly or annual basis. This distinction between wage and salary does not seem to be valid in these days of human resources approach where all employees are treated as human resources and are viewed at par. Hence, these two terms can be used interchangeably. As such, the term wage and/or salary can be defined as the direct remuneration paid to an employee compensating his services to an organization. Salary is also known as basic pay.

Need for Sound Salary Administration:

            Management has to formulate and administer the salary policies on sound lines as (i) most of the employees’ satisfaction and work performance are based on pay; (ii) internal inequalities in pay are more serious to certain employees;(iii) employees compare their pay with that of others; (iv) employees act only to gross external inequities; (v) employee comparisons of pay are uninfluenced by levels of aspirations and pay history; and (vi)employees compare the pay of different employees with their skill, knowledge, performance, etc.

Objective of Wage and Salary Administration:

1. To acquire qualified competent personnel
2. To retain the present employees
3. To secure internal and external equity:
4. To ensure desired behaviour.
5. To keep labour and administrative costs.
6. To protect in pubic as progressive employers
7. To pay according to the content and difficulty of the job
8. To facilitate pay roll administration of budgeting and wage and salary control.
9. To simplify collective bargaining procedures and negotiations
10. To promote organization feasibility principles of wage and salary administration

Principles of wage and salary Administration:

1. Wage and salary plans and policies should be sufficiently flexible.
2. Job evaluation must be done scientifically.
3. Wage and salary administration plans must always be consistent with overall organizational plans and programmes.
4. Wage and salary administration plans and programmes should be conformity with the social and economic objectives of the country like attainment of equality in income distribution and controlling inflationary trends.

Wage and salary administration plans and programmes should be responsive to the changing local and national conditions