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Compensation: Beliefs About The Worth of Jobs: Individual Characteristics
Compensation: Beliefs About The Worth of Jobs: Individual Characteristics
One of the more difficult and more important functions of human resources
manufactures is that of determining the rates of monetary compensation. It is not only
complex but also significant both to the organization and employees
The compensation system has great influence on the employee attitude and
behaviour alternatively the effectiveness of the organisation and its units. Compensation
may directly influence key outcomes like job- satisfaction, attraction, retention,
performance skill- acquisition, cooperation and flexibility.
Compensation is usually composed of the basic wage or salary, allowances,
incentives or bonuses and benefits the fact that how employees are paid, has important
consequences for individual group and organizational performance.
As the name suggests, compensation means what an employee receives from the
employers in return to what he has given to the cause of employer be it in terms of
physical labour or advisory or managerial role. Organisation raises employees, taken work
from them in order to achieve its objectives and pays back to them in terms of salary or
wages, benefits, incentives and better living conditions.
According to Hegewische, The pay package in one of the most obvious and visible
expressions of the employment relationship, it is the main issue in the exchange between
employer and employees expressing the connections between the labour market, the
individuals work and the performance of the employing organisation itself.
The design and operation of payment system in many organisations have often
been institutionalized by custom and practice, tradition and collective-bargaining
mechanisms. Due to competition pressures organisations are continually looking to
increase the added value of their employees by encouraging them to increase them to
increase their effort and performance beyond that which is at a minimally acceptable
standard or by reducing labour costs to a minimum.
INFLUENCES ON COMPENSATION
Following factor are considered responsible for the determination of compensation
in an organisation.
Beliefs About the Worth of Jobs:
For example the influence of the size, responsibility, skill requirements and objective
Individual Characteristics
For example age, experience, seniority, general qualifications special skills,
contribution, performance and potential.
Labour Market:
i.e. Labour supply and demand either at national level or in response to the local labour
market companies will have to match or exceed the wages and salaries offered by their
labour market competitors in order to attract the staff they requires and prevent after
employees to moving out to other organisations
Remuneration Policy and Strategy of Companies
Strength of Bargaining Groups:
For example the strength the two different bargaining groups will be influenced by
collective bargaining arrangements, legal requirements and restrictions on either party, as
well as economic factors such as unemployment levels and job security.
The defence organisation have a sound structure based on job evaluation progress
in order to establish fair differences in payments depending upon differences in job
contents.
Pay structure of the employees of the defence organisations include various aspects i.e.
Pay in band, Grade pay. Good conduct Badge Pay, Dearness Allowances (DA).
Transportation Allowance, House Rent Allowances, Technical Allowances (as applicable).
Apart from this there is provision of Family Planning allowances, Leave Travel Allowances,
Flying pay in respect to Air Force.
There is provision for provident fund deduction which is very useful for the future
security of the worker and his family.
Above discussion suggests that the compensation system in defence system is
comprehensive. There are number of allowances and schemes for future security. There is
no doubt that the Indian Soldiers are well paid and can rank themselves with best forces in
the world. Morale of the forces is high. Motivation level is excellent. Sound compensation
policies have rendered the defense forces an enviable position. Security forces of the USA,
UK, France, Singapore, and South Africa feel proud to have exercise with the defence
forces of India. There have been joint exercises carried out on the Indian as well as foreign
soils. Western countries have recognized the might of the defense organization of India.
WAGES
The basic purpose of wage and salary administration is to establish and maintain an
equitable wage and salary structure. Its secondary objective is the establishments and
maintenance of an equitable labour Cost structure. i.e. an optimum balancing of
conflicting personal interests so that the satisfaction of the employers and employees is
maximized and conflicts are minimized. The wage and salary administration in concerned
with the financial aspects of needs, motivation and rewards
Wages are among the major factors in the economic and social life of any
community. International Labor organization (ILO) has adopted various conventions and
recommendations laying down the principles and methods of wage payment and fixation.
The legal frame work on wages in our country includes the following:
The
The
The
The
DEFINITION
The Wage is the remuneration paid, for the service or labour in production
periodically to an employee / worker. Wages usually refer to the hourly rates aid to such
groups and production and maintenance employees. These are called blue collar
workers On the other hand Salary normally refer to the weekly or monthly rates paid
to clerical administration and professional employees. These are called White collared
jobs
According to the payment wages Act 1936: Wages means all remuneration whether by
way of salary allowances or otherwise, expressed in terms of money or capable of being so
expressed which, if the terms of employment express or employed are fulfilled, would be
payable to a person employed in respect of his employment or of work done in such
employment.
According to the payment of wages, 1936, wages include:i)
Any remuneration payable under any award or settlement between the parties or
order of a court
ii)
Any remuneration to which the person employed is entitled in respect of overtime
work or holidays or any leave period.
iii)
Any sum which by reason of the termination of employment of the person employed
is capable under any law, contract or instrument which provides for the payment of
such sum, whether with or without deduction but does not provide for the time with
in which the payment is to be made
iv)
Any sum to which the person employed is entitled under any scheme framed under
any law for the time being in force.
i)
ii)
iii)
iv)
v)
vi)
iii)
iv)
v)
If the demand is greater than supply, wages will rise and vice versa.
3. Prevailing Market Rate - this is also known as Comparable wages or going wage rate
4. The cost of living - When the cost of living increases, workers and trade unions demand
adjusted wages to off set the erosion of real wages
5. The living wage - this means that wages paid should be adequate to enable an
employee maintain himself and his family as a reasonable level of existence.
6. Productivity - This is output per hour.
7. Trade Unions Bargaining Power Greater the
Strength of trade unions, the higher the wages.Strike is most powerful weapon of
unions.
8. Job Requirement - Generally, more difficult and complex a job higher the wages
complexity of job is measured on the basis of skill effort responsibility and working
conditions required.
9. Managerial Attitudes top managements desire to maintain or enhance the companys
prestige has been a major factor in the wage policy of a number of firms. Desire to
improve or maintain morale, to attract high caliber employees, to reduce turnover
and to provide a high living standard for employees also appear to the factors in
managements wage policy decisions.
10.Psychological and sociological Factors
To satisfy the conditions of equity, fairness and justice, the management should take
these factors into considerations. Psychological persons perceive the level of success in
life.
Example:
Employees of the INFOSYS are best paid in the industry. Passout youngsters of the
institutions aspire to be part of the INFOSYS. The Company has taken into consideration
many factors in deciding upon the wage and salary structure. The top management of the
company taken adequate steps to improve the morale and motivation level of employees.
For this they are paid handsomely.This helps in turn to attract talented high caliber and
competent employees and to retain the best ones in the firm. With this the firm has been
able to provide a high living standard for employees. It is made sure that equal jobs carry
equal wages. Wages are commensurate with the efforts of the employees. There is no
distinction on the basis of caste, colour, sex or religion. Company has greater ability pay
and the standard of living is very high. Wages Company is not only leading one in India but
it has great image worldwide. Recently British Prime Minister Spent much time with
INFOSYS mentor NarayaMurthy than the time spent with political bosses in Delhi.