228Personnel Management Concepts
State the incentive schemes available for indirect workers
Understand the need for fringe benefits
Outline the various types of fringe benefits
Wage payment is a matter of great importance to workers. It determines their standardof living, their attitude towards the company and influences their motivation to work. It isan important issue from the employer’s point of view as well, as their profit is affectedby the total wage bill. Remuneration to labour, thus, is a complex problem and is often thebone of contention between workers and employers. Employers want to keep down thewage rates and employees want to see their wages rise continually. To strike a balancebetween the two, it is necessary to select the system of wage payment carefully. Anideal system of wage payment should have the following features.1.
The system of wage payment should be simple and easily intelligible to theworker. Above all, it must be perceived by employees as equitable.2.
The allocation of gains should be judiciously made among labour andmanagement on some equitable basis.3.
Each worker should be paid fairly, in line with his effort, abilities andtraining.4.
Guaranteed minimum wage:
The system should guarantee a minimum wage (tomeet bare necessities and comforts of life) to every worker. Pay should be enoughto help an employee cover his basic needs.5.
Pay, benefits and other rewards should offer a reasonable totalcompensation package.6.
The wage system should be such that the workers may feelencouraged to produce more and earn more wages.7.
The system must encourage the worker not only to increase thequantum of output but also improve the quality of output.8.
Wages should be paid in cash on a convenient date, time and placeduring working hours. The system should not have any element of uncertainty.9.
Pay should not be excessive, considering what an organisation canafford to pay10.
The system should be flexible to allow necessary changes, which mayarise from time to time.
13.2DETERMINANTS OF INCENTIVES
The effective use of incentives depends on three variables-the individual, work situation,and incentive plan.Different people value things differently. Enlightened managers realize that all people donot attach the same value to monetary incentives, bonuses, prizes or trips. Employeesview these things differently because of age, marital status, economic need and futureobjectives. However, even though employee reaction to incentives vary greatly, incentivesmust have some redeeming merits. For example, there might be a number of monetaryand nonmonetary incentive programmes to motivate employees. Money, gift certificates,praises, or merit pay are of the continuous parade of promotion.