: _ Chapter 7 WAGE AND SALARY ADMINISTRATION po OBJECTIVES: After this lesson, you should be able to: “+ Enumerate the diferent theories of wages + Explain the significance of wages to the worker, labor and labor relations, to the national economy, and to society: + Discuss the procedures of a wages and salary survey; * Compare the procedures of a wage and salary survey; and Deduce the advantages of the wages and salary structures 101 Scanned with CamScannerThe Role of Human Resources in the Payment of Salaries One of the most important functions of the Human Resources is the payment the proper salaries and wages io all company employees. The pay that the employees receive from their employer is very reason for their being in the job. The pay Provides them with strong incentive to do their jobs ell and the rate of pay indicates their status in the company. The pay determines the standard of living and their positions in the community that they live. It must be commensurated with their efforts and contributions to the companys’ profitability index. The determination of the proper level of pay is the foundation effective employee and employer relationship as a satisfied worker will stay longer in the company and develop a working team that could be beneficial to both parties. One way to retain competent employees and keep their morale high is to plan salary levels so as to establish uniformity of pay in relation to the job in the company and those in other business establishments in the community, The function of the payroll in a company is usually the wage and salary administration and it is carried out by the Human Resource Department. The most important duty of the Human Resource Department is to set wage scales high enough to attract better employees and contribute to the level of profitability that will sustain continuous profitable operations. The level of pay must not impair profits, however. Theories of Wages Wage theories deal with the payment of labor employed in competitive enterprises. Wages represent the payment of one factor of production that is manpower. Profits and capital could not be attained without the manpower that has to be paid according to their contribution for the acquisition of enough capital to attain the desired profits. Wages are the contributions or are the shares paid for the value of land, capital and profits. 1. Classical Wage Theory This theory is based upon the fundamental concept that labor is a commodity and we have to pay the price according to supply and demand. When the labor supply is greater than the demand, the lower is the price and when there is greater demand the higher is the price. The price of labor which is called wages, is necessary to keep the laborers to subsist and perpetuate their race. Wages should not fall below subsistence level. When the supply of labor reaches below the industrial requirement, there will be a competitive bidding among employers and therefore there will be a consequent rise in wages. When the price of the labor is below the natural price, the condition of laborers is most wretched. When this happens the laborers could be deprived of those comforts which customs render as absolute necessities, B 2. The Just Wage Theory of St. Thomas Aquinas ‘A just wage is described as wage which live ina manner in keeping, with his position i to social organization based’ on the indivi Permits the recipient worker t T society. This doctrine is related Scanned with CamScannerAccording to this theory, the workers’ cost of living should be considered first in the cost of production. Wages are responsible for allocating labor to various ‘occupations, This theory is the basis in the implementation of minimum wage laws. While it could not be consistent with the minimum requirements for a decent living in the social organization, it responds to the basic requirements for subsistence living. The creation of the Tri-partite Board composed of Labor, Management and the Department of Labor is the answer to the study of the implementation of just wages. . The Wage Fund Theory ‘The wage fund theory expounded by John Stuart Mill and his followers is based on the Malthusian theory of population and the law of diminishing returns. This theory holds the idea that the working capital of the nation provides a fund from which wages can be paid. The fund is to be divided by all the workers proportionately. When a certain group gets a greater share of the total fund, the rest in the group will have less to share. An increase in the wages of some through collective bargaining or any other pressures will adversely affect the wages of others. Under this theory it would appear that it is futile to attempt to increase wages. It would appear that when you increase the wages of other workers in the company, it would redound to decrease the wages of the other sectors, because the portion of the corporate wage fund goes to the selected sectors in the organization. A comment under this theory is that the fund should be elastic for all the other factors of production such as capital, maintenance, materials and labor. It should be elastic enough to meet the economic conditions prevailing conditions prevailing at the time and the conditions of the corporate economy. ‘ Bargaining Theory of John Davidson The bargaining theory proposes that labor is a commodity like anything that could be bought at a price by the user. As a commodity, it carries with it a price that is determinéd by the bargaining process between the buyer and seller. The sellers of labor are the workers and the buyers ate the users or the industries that utilize their services. The labor sets the limit of the value of their services as conditioned by the utility of reward. Such reward is conditioned by what their money can buy with the wages in the light of their actual standard of living. The bargaining theory brings about the organization of labor unions. These unions bargain with management for their services. The management then sets the discounted value of labor based on the value of output in question; while labor demands the living wages that they think is enough to sustain a decent living condition, When management sets a rigid limit on the funds available for labor as it affects operating cost and profitability; on the other hand, labor insists on living wages for their effort. The resultant condition is either a strike ora lockor Scanned with CamScanner‘company. Be re benefits, better working environment, are other factors that affect mobility. In this ee aeons mobility is not judged by the amount of movement existing job differences call for worker movement. The hiring of added labor force, or the transfer of one eee oe = a company at a particular wage is based on the assumption of { that the added labor will contribute to the increase in production output the increase in the quality of the product. While such assumptions may hay bearing to a certain extent, any increase in manpower tends to decrease tf value of the marginal product as the number of workers increases. In 9 developing economy where manpower is in great supply against demand competition in the labor market is seldom felt by the industry, except in so critical positions where specialization is in great demand. ._ The Purchasing Power Theory The purchasing power theory tries to establish the relationship be wages and the level of economic activity. The level of economic growth dependent upon the savings generated because the inctease in wages creal a surplus that propels growth. The more income the worker gets, the bi the purchasing power of the workers; then this increases consumption © goods and services. Increased consumption of goods generates employment opportunities. a Labor Theory of Value Karl Marx propounds this theory of labor. This g of labor. It emphasizes that labor is the source of al this important component, there could be n Every good that is produced could be tra; worker and, therefore, labor must get the greate philosophy of some organized labor groups who share of the profits of the company operations, meee tion that profits are the surpluses of the other ace, ives credence to the alu Product and that wi T share of the Profit. This is Scanned with CamScannerthe activists’ group of labor unions, this can create labor unrest detrimental to both labor and management and even to economic growth. 8. The Standard of Living Theory of Wages A recent development in labor market is the theory of living wages that means that wages should be based on the cost of living. The cost of living is dependent upon the economicneeds of the family for the basicnecessities of life for food clothing and shelter. While the philosophy is economically sound for the improvement of the living conditions of the labor force, it is counterproductive 3 due to the forces of global economic activity. Our productivity index has to cope with increased competition in the global market and our products must be paired in quality and price. Any increase in economic growth would redound to increased wages. Nevertheless an increase in income would mean more consumption. More consumption increases the prices of goods and thus living wages also need to be increased proportionately. There could be no end to this argument. It is the government, labor and management that must sit together to determine the level of living wages if possible by industry and by region. Wage and Salary Surveys Once the worth of a job has been established using one of the job rating systems, the actual salary to be paid for each job must be determined. A major factor in making the determination is the wage survey. Since salaries paid by other companies have an effect on employment, morale and turnover rate, close attention is paid to the salary that is prevailing in the community and industry for specific jobs. Most companies participate in wage and salary surveys or they conduct their own surveys. Informal surveys may be conducted through telephones and informal interviews. Formal salary and wage surveys are questionnaires based on benchmark jobs that are also present in other companies and industries. In the formal survey method, the Human Resource Department prepares a set of questionnaires incorporating common jobs present in the company and is comparable with other jobs in other industries. Procedure in Conducting Wage and Salary Surveys Before embarking on a wage and salary survey, the Human Resources Department should study the wage and salary data that are already available. In any request for survey data, it could be recognized that job ttle alone is not good enough for matching, jobs. Each job title should be accompanied with one paragraph job description so that itis possible to accurately compare jobs. In addition to the base salary, the information should include data on shift premiums, overtime payment practices and methods of wage payment. Some surveys also include questions on paid holidays, vacation 105 Scanned with CamScannerThe following are the steps in conducting the survey: i. List of Key Job Positions Detailed Description of Jobs Collection of Salary Data Compilation of Salary Data Results of Survey Defining the labor market. Establishing the boundaries of the pertinent labor market is the most critical step in the survey procedure. It involves the selection. of the industry, the region or area or the firm to be inchided in the survey. List of key jobs and positions common to most firms in the survey. This will ensure a representative sampling of the jobs that will be selected as universal for a particular wage or salary survey. A detailed description of the key jobs and positions that are to be included in the survey and that is common to most firm or industries. Key jobs are labor gtades that are comparatively stable in duties and responsibilities. These are Occupations that are common in most industries and scattered through the ladder of labor classification and commonly familiar to most people in th industry. j Collection of accurate wage and salary data, This may be done through set of questionnaires and. supplemented by intery information. The information must be able to pinp. has to be addressed by the compensation level the terms of payment plan. ews to get the accurate int the problem area » compensation structure Scanned with CamScanner5. A compilation of the wage and salary data for each job. The data gathered will provide management with the opportunity of arriving at the arithmetical average, the median and the range or rate paid and the supplementary wage data. 6. Presentation of the results of the survey. The results are properly evaluated and HRD prepares the corresponding recommendations to the management of the most appropriate action to take relative to the revision of the current wage structure. Participating companies are also provided with the summary of the findings to foster continuous cooperation. After the organization completes the salary survey and finds out what he Prevailing salaries are in the community for comparable jobs, it must then make several decisions: 1, Whether the company should pay salaries above, below or at the same level, as the others in the same industry in the community are paying for the same jobs. 2. Whether the company should pay a single rate for each job, or slot the jobs into Tanges or grades which would provide room for merit increases. 3. How many pay grades or salary ranges to use, and how wide each pay grade should be (from the minimum of the grade to the maximum). 4. Whatis the range of the amount in terms of money value that should be allotted for each salary grade levels? Although there are no set rules for making these decisions, one tool that is often used to simplify the process is the use of two-dimensional graphs, also known as data trend graph. When the graph is used with the point system, the values of the points for key jobs in the industry are plotted with the lowest pay at the bottom. The survey data for any job is then plotted according to the evaluation points and grades. Eventually all the pay survey data should be plotted. ‘An examination of the graph will indicate the trend of the data plotted. A line is drawn to indicate this trend, using one of the following techniques: 1. Bye Inspection ~ The line is drawn freehand so that about the same number of data points fall above the line. It follows the general trend of the data. This technique is the least scientific and reliable as this does not require scientific computations. It is more of a judgmental analysis that is used only by experts in the field of job evaluation. 2. The Least Squares - This uses the statistical formula; the trend line will normally follow a straight path. It presents more accurately the relationships between the peso or money value and the points for the key jobs. 3. The Second Degree Curve - Using another statistical formula; the trend line will normally take the form of a curve and may more accurately indicate the trend of the data. 107 ta Scanned with CamScannerge. ta collected si The trend line should correctly reflec the trend of the Get Te he rangi competitive pay rates and ranges will hold throughout the SSN ints on 4 method is used, the rank number or grade can be substi i horizontal of the graph, tween inant jonship between int A similar graph should then be drawn to reflect the resto aed and drain, existing rates and job rating points. A trend line should be e end line. In this way, — This trend line should be compared with the outside-survey 7 i ympany. Then the management can see how salaries compare with those outside the company. jine, meet it decision will have to be made whether to pay below the survey trend lin it or Pay above it. In deciding whether to match a survey trend line, management faces 2 ap etween personnel and economic forces. Ifthe company pays above the survey ia line, its ability to compete may be endangered as the labor cost will a ig! a i the same industry, thereby added cost of production will be added to the cost 2 ig product. Ifthe company pays below the trend line, its ability to hire capable employees may be affected or this will cause personnel turnover. To reconcile these two conflicting forces, management may decide its own slope line that should be about the same as the result of the survey. Another important decision is whether hourly paid occupations should be assigned a single rate or a range of rates. For production or maintenance workers, most organization pays one standard rate for all jobs in the same grade. That is especially true when an operation is so standardized that it is difficult to determine accurately the contribution of workers. A single rate for each job has the advantage of eliminating favoritism. The Development of Wage and Salary Structure The design and operation of wage and salar " management and employees. Wage and salary structure is the hierarchy of jobs to where the pay rate is attached. The positions are allocated in pay grades according to the job evaluation results and its relations with the pay system derived from the resets of the salary survey. The jobs are ranked in ascending to descending order according to their importance and eeilcn ce “points or ranked earned in the job evaluation rogram conducted by the and the committee creat 4 Poe responsive pay system. ited for the development of a ry structure is the concern of The following are the advantages of the wage and salary structure: 1. It affects the workers’ earning and standard of living, It eases the recruitment and maintenance of an effective labor force, It develops employee morale and increases work efficiency, It represents cost and competitive advantage in the in It helps in preparing budgetary allocations and eas, adjustments and-as an aid in short term 108 2 Fen dustry. €s computation of and long range plans, Scanned with CamScanner6. Iteliminates pay distortions and inequities in employee compensation. 7. Itestablishes an equitable salary range for various jobs. Wage Structure Design The design of the wage and salary structure is the establishment of the job classes and rate ranges. All jobs within a class are treated in the same way for purpose of economical administration. Pay: structure ranges should be used in developing a schedule for both rank-and-file employees, technical and managerial positions. Insome companies, they have a separate structure for hourly and daily paid employees and separate salary structure for regular monthly paid jobs. The managerial pay systems are separated, based on rank depending on their assignments and contributions to the companys’ profitability index. E The number of pay ranges in pay structure depends on the company and on the number such structures in the company. If a company has a single salary structure then, there should be many pay grades. If the organization has one wage structure for hourly workers, another for office regular workers and still another for supervisors and managerial employees, then there should be a moderate number of pay grades in each structure. There is no standard number of pay grades per structure for any industry or company. This depends on the number of job classes and the number of employees in the company. The greater the differences in job classes the greater the number of pay grades in the salary structure to give credence to differences in duties, responsibilities and other factors of variances as determined by the job evaluation program. The same could be said for the width of the salary grade. There is no standard guide as to the spread of pay grades. For hourly jobs, the spread from the minimum to maximum may vary from ten percent (10%) to twenty (20%), while for salaried jobs, the spread may vary from 15% to 75%. The typical spread of salaried jobs is 3% from the minimum to the next to step. (See Sample computation) Once the pay structure has been determined, the next step is to assign employees to. their proper job classifications. If the jobs are properly evaluated and were developed before the implementation of any structure, most existing salaries should fall within the salary range established for their jobs. When employees’ salaries fall below the minimum of the pay grade for the job, then it is called green circle rate. When that ° occurs, the decision to bring salaries to the minimum of the grade should be based on the employees’ performance. If the employees are on training stage, their salaries should perhaps be below the minimum of the grade until they can fully meet the requirements then they are brought up to at least the minimum of the pay grade. SALARY RANGE Itis the range of the salary that is paid to an employee doing similar functions that has a minimum and maximum pay and a series of step adjustments. It is to provide adjustment in pay for performance evaluation without distorting the salary pay plan. Scanned with CamScannerae jt tep. justments within the pay grade of about 3% between each step. Te letermined by thei ae justments by the Tripa y the industry rate and the prevailing wages ae is provided bel It provides adj ‘ a Sample of Wage Plan for Small and Medium Enterprises WAGE RATE FOR DAILY PAID EMPLOYEES Pay | Hirin; First Third | Fourth Fifth Grade| Rater Step ae Step Step Step Zi 1 375.00 386.00 397.00 409.00 421.00 433.00 2 421.00 433.00 459.00 472.00 500.00 530.00 3 500.00 530.00 533.00 550.00 566.00 583.00. A. 566.00 583.00 600.00 618.00 636.00 655.00 5 636.00 655.00 675.00 695.00 715.00 736.00. THE NATIONAL GOVERNMENT WAGE PLAN Annex “A” Fourth Tranche Monthly Salary Schedule for Civilian Personnel of the National Government Effective June 1, 2012 (In Pesos) Salary 2| Step3 | Step4 | Step5 | Step6 | Step7 S2laXy | step 1 | Step2 | Step3 | Step4 | Step5 | Step6 | Step 1 9000 9,090] 9181] 9273| 9,365[ 9,850| 9,554 9,675| _9,772| 9,869] 9,968| 10,068] 10,169| 10,270 3 10,401] 10,505] 10,610] 10,716] 10,823] 10,931] 11,040 4 1is1] 11,292] 11,405{ 11,519] 11,635] 11,751[ 11,809 5 72,019] _12,139| 12,261[ 12,383] 12,507] _12,632| 12,759 6 12,921] 13,050] 13,180] 13,312[ 13445] 13,580| 13,716 i, 8 9 13,890 14,029 14,169 14,311 14,454 14,598 14,744 14931] 15081| 15232| 15,384] 15538 15,693| 15,850 16,051| 16212| 16374[ 16538] 16703| 16870| 17,030 ~10 17,255|_17428| 17,602] 17,778| 17,956| 18,135] 18,317 ih 13,549| 18,735| 18,922] 19,111] 19,302| _19,495| 19,690 2 19,940] 20,140[ _20,341| 20,545| 20,750| 20,958] 21,167 [13 _[- 21436] 21,650] 21,867 22,086] 22,306 22,529] 20,755 4 23,044[ 23,274[ 23,507| 23,742[ 23,979[ 24219] 24,461 110 Scanned with CamScanneres [_ 15 | 24887| 25,161 [25438] 25,718] 26,000] 26286] 26,576] 26,868 16 26878 | 27,174|"27.473| 27,75] 28,080] 28,389] | 28,702| 29,017 a 29,028] 29,348 99,671] 29,997] 30,327| 30,661] 30,998| _31,339 | 18 | 31351| 31,696 | 32,034) 32,397] 32,753] 33.13| 33.478 33,846 19 33,859| 34,231 | “34,608[ 34,988 | 35,373 35,762[ 36,156] 36,554 20 36567| 36,970] 37,376| 37,788[ 38,203| 38,623] 39,048| 39.478 21 39.493] 39,927] 40,367| 401 41,259[ 41,713[ _42,172| 42,636 2 23 42,652] 43,121| 43,596| 44,075] _44,560| 45,050| 45,546] 46,047 le 46064) 46571] 47,083| 47.601[ 48,125| 48,654| 49,190] 49,731 24 49,750} 50,297] 50.850] 51,410] 51,975| 52547| 53,125| 53,709 2B 53,730| - 54,321| 54,918| _55,522| 56,133| 56,750] _57,375| 58,006 26 58,028 | 58,666] 59,312| 59,964| 60,624| 61,291| 61,965] _ 62,646 | 27 62,670| 63,360] 64,057 64,761| 65,474| 66,194] 66,922 67,658 28 67,684 68,428| 69,181| 69,942| 7o711| 71,489| 72,276 73,071 29 73,099| 73,903 74,716| 75,537| _76,368| 77,208| 78,058| 78,916 30 78,946| 79,815] 80,693] 81,580] 82,478| 83,385] 84,302] 85,230 31 90,000| 90,990] 91,991] 93,003 94,026[ 95,060] 96,106] 97,163 32__| 103,000] 104,133] 105,278 | 106,437] 107,607] 108,791] 109,988] 111,198 33_| 120,000 2 Annex “B” Fourth Tranche Monthly Base Pay Schedule for Military and Uniformed Personnel Effective June 1, 2012 (In Pesos) DILG Hentai DND PNPand _ | PCG and NAMRIA | Monthly BJMP and BFP Bese Base Pay Candidate Soldier ee Z Fire/Jail ; Apprentice Seaman/ Private Officer I Police Officer | seaman Third Class 14.834 Private First Seaman Second Class | 15,952 Class Ms Fire/Jail Police af Corporal (Officer It Officer IT Seaman First Class 16,934 Sergeant Petty Officer III 17,744 Staff Sergeant | Fel OFfcer_ | police Officer I | Pety Officer I 18,665 ll Scanned with CamScannerTechnical Ser- geant petty Officer! Master Senior Fire/Jail | Senior Police ief Petty Officer {Sergeant Officer I Officer | ee Senior Master | Senior Fiefjal [Senior Police | Senior Chef pety Sergeant Officer II Officer II Officer Chief Master | Senior Fire/ail [Senior Police | Master Chief Petty | Sergeant Officer III Officer 111 Officer ) First Chief Master 7 Senior Fire/Jail | Senior Police _| First Master Chief 27425 | Sergeant Officer IV. Officer IV Petty Officer Cadet Cadet 27 AS Probationary Second! 27,425 Lieutenant Second 29,945, Lieutenant Ensign First Lieutenant Junior 32,341 Ticcienant Inspector Inspector Gade x Senior Lieutenant Senior 35,312 Captain eee Senior Inspector | Grate 5, . Lieutenant Major Chief Inspector | Chief Inspector] Cmmmander 37,313 asap Superintendent | Superintendent | Commander 40,298 ‘Senior Superin- | Senior Superin- ‘i - Colonel eae a Captain 43,521 Brigadier Chief Superin- | Chief Superin- General tendent tendent ee 47,002 ‘Major General __| Director Director Rear Admiral 50,763 Vice Admiral 34,824 Lieutenant Deputy : General Director-General | “¢miral 59,210 General Director General ET Salary Adjustments with High Seniority “Another reverse situation is when the employee with high seniority, is either so ‘has received so many increases that his salary is above the maxi of ximum ‘competent or ‘This is called red circle rate, which can be handled in two way: s: the pay grade. 1. Review the performaitce of the employee. If the employee is doi 5 work and is capable of performing higher tasks Sal icoine olen es and has Scanned with CamScannerdisplayed potentials for promotion, then he has to be’promoted and given the salary grade corresponding to the new assignment. He should be under Probation in the new assignment for at least 3 months before he assigned to the new pay grade. + : 2. Ifthe performance review reveals that theemployeeisnot worthy tobe promoted and such salary increase was discreetly earned for some obvious reasons, then the employee will not get normal merit increase due to the implementation of the new structure. As the range moves up due to cost of living index and the salary plan is revised accordingly, then his salary probably will still fall within the range and then he could be entitled to future adjustments if deemed necessary. In order to remain competitive, a salary structure should be reviewed every two or three years depending on the inflation rate prevailing in the country brought by economic factors or internal factors such as improved productivity and profitability. Methods of Wage Payment The main purpose of a formal wage and salary management plan is to have a systematic method of payment to ensure that employees receive a fair wage and salary for the work they perform. Up to this point, we have examined how these wages are determined or how much the employees should be paid for the work they perform. Now we will examine the methods of determining how salaries are paid. Two organizations may have similar salary structures for their jobs, yet may use different methods in computing the employees’ salaries. Salaries may be the same but one company may pay on hourly basis plus piecework There are two methods of paying salaries: 1. By the Time Worked - earnings do not fluctuate with the amount of work performed or with the quality of output. In this method, wages are computed in terms of unit of time. It is common to pay workers by the day and the term day-work was adopted. Day-work methods of pay usually include weekly, or biweekly or monthly bases. Paying by the time worked is called Non-incentive wage plan because the method of calculations will not immediately result in more money. No matter how hard an employee works during an hour, the pay will be computed by the hourly rate and no more. Wages under this plan are computed by multiplying the number of hours worked by the rate per hour, as follows: HxR=W Inwhich H - Hours actually worked R - Rate per hour in pesos W — Total wages earned Scanned with CamScannerconditions: Payment by piecework is satisfactory under the following conditions: 14 Paymenton the’ basis of time worked is more satisfactory under" the followin Employees have little or no control over how much work they produce, 2. There is no clear-cut relationship between the effort made to produce, the work and he amount of work produced. 3. Work delays occur often and are beyond the employees’ control. 4. Quality of work is very important. Units of work Produced cannot be distinguished and cannot be measured. — By the Amount of Work Produced - earnings depends on how much work the employee completes or on a related factor, such as the quality of work. This method of paying wages is called an incentive wage plan. The most common of incentive plan is called piecework. Piecework salaries are determined by the number of pieces produced or completed and each piece is assigned a piece value that is called piece rate. Time study sets the acceptable number of pieces an employee can produce at a given time taking into consideration the acceptable quality of work performance. An industrial engineer studies jobs and he is tasked to develop methods of performance revising the flow. ‘of work, changing materials and equipment so that better work systems are developed. There are times that rates are based on past experiences on similar jobs or on guesswork. The formula for computing salaries under piecework is as follows: NxU=W In which N U Ww Number of units produced Rate per unit in pesos Wages earned per day or per week Guaranteed piecework occurs when employees are paid their days’—work when the work distortion is not caused by the employees’ lack of power or some other factors beyond the control of the workers. When a unit of completed work can be measured easily; ’ When there is a clear relationship between a workers’ effort and the results of his efforts; . : When the quality of work is less important than quantity or when quality standards are uniform and measurable; When the flow of work is regular, breakdowns are few and jobs follow a standard procedure, with few interruptions. Scanned with CamScannerWage and Salary Policies The company or any organization must have a clear-cut wage and salary policy. These policy guidelines will help the organization have better relationships with employees and develop a more comprehensive employee financial planning program. The wage and salary must appeal to all employees and stimulate them to greater efforts. These characteristics include the following: 1. The wage and salary plan must be easily understood. Every worker wants to know how his company wage plan works. To keep employees in the dark as to how their earnings are determined could lead to distrust on the management and fear that they are not getting paid for what they have earned. 2. Salaries in the wage plan should be easily computed. Most employees like to compute from to time what they are earning and to make sure that the salaries are correct. Therefore, a wage payment plan should be simple enough to allow quick calculations. The method of wage payment must be explained during the orientation program and employees must be made to understand that wages are related to employees effort and productivity and based on a wage Plan that relates to duties and responsibilities of the positions and other factors considered in the job evaluation program. 3. Salaries must be made relevant with efforts. Standards should be set and can be reached by good workers. Standards should be set so as to challenge a worker making him reach the extra effort. Once he has achieved the standard, he should be rewarded for his effort with increased earnings, 4. Incentive wage plans should provide payment for incentive earnings to employees soon after they have been eanied for efforts exerted to reach the standards. In this way, the reward or penalty is fixed in their minds in relation to the work they do. Obviously, it would be too costly and unwieldy to prepare a payroll every day. A weekly payment of wages is most reasonable. 5. ‘The method of payment should be stable and unvarying. Frequent changes in wage payment plan may lead worker to think that management is trying to confuse and or even cheat them. It is important to choose a plan that will fit the needs of the organization so that the necessity of frequent subsequent changes eliminated. Morale Renewal in the Workplace 1. Know that leaders have limitations. Steve Berglas of the Harvard Medical School believes that “people who achieve great heights but lack the bedrock character to sustain them through the stress are headed for disaster.” 115 Scanned with CamScannercould result when a leader does H . Je predicts that one or more of the four adventure-seeking or not have the requisite character - arrogance, aloneness, adultery. 2. Choose character, John C. Maxwell is right in his observation thaty “We have NO on ce a lot of things in life. We don’t get to choose our parents. We don sele : e lection oe deonmeantencenr bith asd uptenapae eee conor talents and IQ, But we do choose our character. Infact, we create it every time we make choices.” : mn character. Do you want easy , In the workplace, you can create your ow! fort? 7 mpany? Do you stand by your money or work for it? Do you keep the right co principles? You can, if you choose to. 3, Walk the talk. 1 is important in the workplace. In fact, many employers prefer to then skills second. Skills can be taught but Integi have employees with integrity first, integrity is innate in ones’ character. 4, Avoid compromising. While life is not black or white but shades you have to choose between right or wrong. A wrong can 1 if a compromise is reached. of gray, there are instances when ever be right even If workers really want straight leaders, they must be vigilant and uncompromising in asserting their rights as well as in performing their responsibilities. When compromises are made, the rest of the organization, the buying public and the society are affected. 5. Use the same measures on yourself. You want a leader who is not immoral, corrupt or incompetent. Exact the same measure or standards on yourself. Be as harsh on yourself as you are in judging others. That you are just a follower is never an excuse for being la2y, incompetent or immoral. 6. Face the mirror. If you want one less scalawag in the workplace, reform yourself. Look for 4 areas for improvement in your character. If you have the guts, ask somebody you trust to tell you what‘is wrong in your character. ‘Take the feedback positively as a gift for your improvement. Don't rationalize but instead work at developing a better you. } : ; | 7. Show the mirror to your leaders. If you want honest and concerned leaders, you might ju: i : st have to show them the mirror too. Some of them might have blind apa and can't see theit mistakes, shortcoming and transgressions. 116 Scanned with CamScannerRemember that tyrants happen only when the led blindly accept tyranny or do not do anything about it. To make leaders honest, they must know that they are also being watched and evaluated and that positions and possessions are only temporal and ephemeral. 8. Don’t just admit mistakes; correct them. People who do not know that they are wrong cannot be corrected. The first Step towards any form of renewal is admission that there is a need for correction, Humility to admit mistakes is great but not enough. There must be correction. Even the Bible mains stiff-necked after many rebukes will suddenly be destroyed - without remedy. 9. Have an improvement plan. Do not leave matter of improving yourself. Moral renewal does not happen by accident. You must exert deliberate effort to mend the crack in your character, 7 Task yourself to show improvement. Have reasonable milestones that you must monitor and check regularly, then celebrate your little victories. But do not boast about your achievement if humility is a virtue you are trying to instill in yourself. 10. Rebuild and do not slide back. Set your mind toward the future. Stop going back to your past, except to see how much you have progressed. Let your guideposts be milestones in the future and not how you were before. If you have improved in a facet of your character, make sure that you don’t slide back. Be not like the dog that eats his own vomit. Never underestimate what ordinary people can do, especially when they heed the call of one leader who was Killed in Dallas, almost our decades ago,”...ask not what your country can do for you; ask what you can do to your country.” Other Information Related to Wages Labor and Wages The type of job one does and the financial compensation he or she receives are very important in our society. Job type is linked to status as is wealth. While the type of job one performs is arguably more important status wise then wealth, both are important to Americans. In the past we used to use other descriptions to classify workers. The terms blue collar collar employees were used to describe the type of vocation. . : 47 Scanned with CamScannerBlue Collar — Mant ual laborer White Collar - Office workers i Pink Collar —Job associated with women like nursing, This, being a rather sexist term, is no longer used- secretarial, etc. Today we classify our work roles into three categories called labor grades. The: labor grades are described below: 7 Skilled Labor-these are workers who have received specialized training fo do their jobs. They have developed and honed a special skill and may or may not need to be licensed or certified by the state. The examples of skilled laborers are carpenters, plumbers, electricians, business executives and mS accountants, engineers, police, mechanics, etc. These may be blue or w te collar workers. Unskilled Labor - These are workers who have received no specialized training and have few specific skills. As our society has grown into an increasingly technological one, the members of this group have developed more and more skills. ‘A mechanic, for example, used to be considered unskilled labor. Today that is no longer the case. Mechanics require a great deal of skill and training to work with today’s modern engines. Examples of unskilled laborer are construction workers, sanitation and custodial workers, painters, factory assembly line workers, etc, These are blue collar workers. Professionals- Arguably the elite of the labor grades, these are those workers who need an advanced degree to do their jobs. The three primary groups of professionals are doctors, lawyers and teachers. These are white collar workers. ‘These labor grades are often said tobe non-competing labor grades because workers rarely move from one grade to another and do not compete salary wise with each other. There are reasons why they do not compete with each other. The cost of ‘education and training may be a significant obstacle. They might lack the opportunity to. make such a move and they might also have a lack of initiative. 3 Scanned with CamScannerCase Study 7 The Unhappy Supervisor Miss Joan Santos, a computer programmer in Mannadel Corporation for more than six years now, was discussing her salary situation with Mr. Roderick Santiago, her manager. Miss Joan was unhappy because she did not receive any salary increase last salary evaluation, while some employees who were recently hired got an increase from ten to fifteen percent. ‘Miss Joan’s performance has been considered very satisfactory for the last five years and previous to this she got very substantial increases in salary due to the important programs that she made for the corporation related to accounting and personnel matters. She made a lot of improvements in the purchasing systems and systematized inventory records in materials management. The management had recently started a comprehensive job evaluation program and some positions are aligned within the salary grade approved by the management committee, where Mr. Roderick Santiago is also a member. Mr. Santiago explained to Joan hat her salary was already way above the salary grade for the position evaluated and allocated in the salary plan; hence, she will not get any increase at the moment until the salary range can catch up to her level in the salary plan. Mr. Santiago also explained that she is the most senior among the programmers and that instead of cutting her salary back to the job range, they are considering her for an incentive bonus, which is not as substantial as that of her co-worker’s in the department who are new in the positions. Miss Joan is not satisfied with the program explained by Mr. Santiago. The whole night she planned to file a leave of absence despite the many rush programs assigned to her. Note: Use the Case Format Scanned with CamScannerI. TRUE or FALSE. Write T on #1 i the statement is incorrect, ee —— 1. Theword salary comes from the Greek word salarium. —— 2 Defining the labor market is one of the steps in conducting a wage and salary survey ——— 3. The laws of a country can affect the wages of that country. 4, Time study is needed if an employer will use a piecework method of wage payment. 5. The bargaining theory brought about the organization of minimum wage laws. 6. The marginal productivity theory explains the wages in the modern industry. 7. Profits and capital can not be attained without manpower. 8. Presentation of the survey’s result is optional in conducting wage and salary survey. 9. The wage and salary plan must be easily understood. 10. A wage payment plari should be simple enough to allow quick calculations. II. MULTIPLE CHOICE. Encircle the letter of your answer. 1. This theory of wages is associated with St. Thomas Aquinas. c. Classical Wage Theory a. Wage Fund Theory d. Purchasing Power Theory b. Just Wage Theory i zy of wages is expounded by John Stuart Mill. c. Classical Wage Theory d. Purchasing Power Theory 2. This theos a, Wage Fund Theory b. Just Wage Theory qa. Scanned with CamScanner10. . ‘The reason why there are minimun wage laws is bec: abor force, but is : the | . This theory, if applied, will be in favor fF counterproductive. ing The Living Theory andard of a. Purchasing Power Theory & The eory of Value b. Classical Wage Theory jg a statement that “The more money I have, the more clothes 1 can buy, characterizes what theory of wages? i ndard of Living Theory a. Purchasing Power Theory 5 Teeny) of Value b. Classical Wage Theory . Who propounded the labor theory of value? a. John Stuart Mill ec. St, Thomas Aquinas b. John Smith d. Karl Marx -ause of the theory. . Wage Fund Theory a. Classical Theory d. Just Wage Theory b. Purchasing Power Theory This method of wage payment is often used in paying wages for factory workers. a. Piecework method cc. Incentive method b. Day-work method d. Hourly method This method of wage payment is used in paying wages for people working in the office. a. Piecework method c. Incentive method b. Day-work method _ d. Hourly method . Which of the following is not an advantage of the wage and salary structure? _ a. Itestablishes equitable salary range for various jobs. b. Itrepresents cost and competitive advantage in the i 2. Itduesn’teliminate pay distortions. mney) d. It develops employee morale and increases work efficiency. This type of theory gives weight to the merit of work, a, Purchasing Power Theory ©. The St wi b. Classical Wage Theory d. Labor Theory es Living Theory Scanned with CamScannerIIL ESSAY. (5 Points) é Discuss the two th eories of wages and how you can apply them in a present- day environment, 123 Scanned with CamScanner