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Compensation Management

Compensation Management

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Published by Marketing Expert
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Published by: Marketing Expert on May 03, 2009
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03/08/2012

 
HTTP://PAKISTANMBA.JIMDO.COMFOR FREE DOWNLOADING OF THIS REPORT AND FORMORE PROJECTS, ASSIGNMENTS, REPORTS ONMARKETING,MANAGEMENT,ECONOMICSMARKETING MANAGEMENT,ACCOUNTING,HUMAN RESOURCE,ORGANIZATIONAL BEHAVIOR,FINANCIAL MANAGEMENTCOST ACCOUNTINGVISITHTTP://PAKISTANMBA.JIMDO.COM
COMPENSATION MANAGEMENT- I
MEANING OF WAGE/ COMPENSATION PAYMENT :
Wage is a monetary payment made by the employer to his employee for thework done or services rendered. It is a monetary compensation for the servicesrendered. A worker may be paid Rs. 100 per day or Rs. 4500 per month. This is wagepayment. The worker gives his services and takes payment called wage payment.Industrial workers are paid remuneration for their services in terms of money calledwage payment. Wages are usually paid in cash at the end of one day, one month or oneweek. Money wage is the monetary compensation or price paid by the employer to hisemployee for the services rendered. Such compensation is also called wage or salary or reward given by an organisation to a person in return to a work done.
 
Generally, compensation payable to an employee includes the following threecomponents:
Basic compensation for the job (wage/salary)
Incentive compensation for the employee on job
Supplementary compensation paid to employees (fringe benefit and employeeservices)
IMPORTANCE OF WAGE PAYMENT :
1. To worker :
Wage payment is important to all categories of workers. Wage is a matter of life and death to workers/employees. Their life, welfare and even social status dependon wage payment. It is only source of income to large majority of workers. They andtheir unions always demand higher wages and other monetary benefits.Majority of labourproblems and disputes are directly related to wagepayment. The efficiency of workers and their interest and involvement in the workdepend on wage payment. Even their attitude towards employer depends on wagepayment. In brief, wage payment is a matter of greatest importance to workers. Wageproblem is the most pressing and persistent problem before the entire labour force.
2. To employer :
Wage payment is equally important to employers as their profit depend on thetotal wage bill. An employer in general is interested in paying low wages and therebycontrols the cost of production. However,low wages are not necessarily economical. Infact they may prove to be too costly to the employer in the long run. E.g. In garmentmanufacturing company if tailors are not paid properly then it is difficult for the companyto retain them. An employer has a moral and social responsibility to pay fair wages tohis worker as they are equal partners in the production process. He should give fair wages which will benefit to both the parties. Employees will offer full co-operation to themanagement when they are paid attractive wages. On the other hand, strikes anddisputes are likely to develop when workers are paid low wages or when they aredissatisfied and angry due to low wage rates. It is possible to earn more profit by payingattractive wages to workers. E.g. Reliance, Citi Bank, Motorola are earned huge profitsbecause of their higher pay packages.
 
3. To government :
Government also give special importance and attention to wages paid toindustrial workers as industrial development, productivity, industrial peace and cordiallabour- management relation depend on the wage payment to workers. Governmentdesires to give protection to the working class and for this minimum wages act andother Acts are made. In India, wages are now link with the cost of living. This is for theprotection of workers. Government is the biggest employer in India and the wage ratesof government servant and employees of public sector organisationsare decided bygovernment only. Revision of pay scale of government employees made for adjustingtheir wages as per the cost of living. For this, “Pay Commission” is appointed and payscale is adjusted as per the recommendations made.In India, wage payment is very critical, controversial and delicate issue for allcategories of work force. This is due to poverty, rising prices, mass unemployment andrising population. Wage payment indeed a vexatious problem and needs to be tackledfrom economic, social and humanistic angles.
CONCEPT OF FAIR WAGES :
Fair wages is the wage which is above the minimum wage but below the livingwage. Obviously the lower limit of the fair wage is the minimum wage and the upper limit is set by the ability of the industry to pay. Between these two limits, fair wagesshould depend on the factors like –1.Prevailing rates of wages in the same occupation
2.
Prevailing rates of wages in the same region or neighbouring areas3.Employers ability to pay4.Level of national income and its distribution
5.
Productivity of labour 

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