Wages and salaries administration

By: Mr. Ramesh Kumar Nehra

Compensation management
lCompensation is what employees receive in exchange for their contribution to the organisation.
Total compensation = Direct + Indirect Compensation

Base Pay



Components of employee remuneration
Remuneration Financial Basic wages Incentives, Individual plans Group plans Perquisites Car Club membership Paid holidays Furnished house Stock option scheme Non-financial Job context Challenging job Responsibilities Growth prospects Supervision Working conditions Job sharing etc

Fringe benefits P.F. Medical care Accident relief Health and Group insurance

Concepts of Wages
lMinimum Wages lFair Wages lLiving wages

Objectives of compensation planning
lInternal equity lExternal equity lIndividual equity lAttract talent lRetain talent lEnsure equity lNew and desired behavior lControl costs lEase of operation

Motivation and performance model
Feedback to employees Rewards are given Employee considers Equity of Performance rewards

Employees set Goals and expectations

Performanc e Is rewarded

Employee sets new goals and Expectations based on prior experiences

Importance of an ideal remuneration system
Desire for performance more pay strikes grievances search for options absenteeism turnover Pay dissatisfaction lower job psychological attractiveness dissatisfaction withdrawal of jobs absenteeism visits to the Doctor poor mental health

Influencing factors of Remuneration
Remuneration External üLabour Market üCost of Living üLabour Unions üGovt. Legislations üSociety üEconomy Internal üBusiness Strategy üJob evaluation & PA üThe Employee

Devising a remuneration plan
Job Description Job Evaluation Job Hierarchy Pay Survey Pricing Jobs

The Development of a wage trendline
New key Job B 10 9 Wages 8 or 7 salaries 6 5 4 Key Job A

Wage-trend Line


200 300

400 500

600 700 800 900 1000

Point Values

Challenges of remuneration
Skills-based pay Salary reviews

Remuneration Employee participation Comparable worth

Pay secrecy

Wages Policy in India
lPayment of Wages Act, 1936 lIndustrial Dispute Act, 1947 lMinimum Wages Act, 1948 lEqual remuneration Act, 1976 lPayment of Bonus Act, 1965 lWage Board

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