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Q.1 Explain Wage Administration policy. What are the ways by which wages and salaries are managed in India? ANSWER:
Wage and salary administration revolves around designing and managing policies and methods of disbursing employee compensation. Traditionally it includes such areas as job evaluation, maintenance of wage structures, wage surveys, incentives administration, wage changes and adjustments, supplementary payouts, profit sharing, control of compensation costs, and other related pay items. Salaried often implies a status distinction, because those who are on salary are generally white-collar, administrative, professional, and executive employees, whereas wage-earners are designated as hourly, non-supervisory, or blue-collar. Wage-earners in some organizations do receive full wage if they are absent for such reasons as sickness, whereas salaried employees, especially at the lower levels, often receive overtime pay when they work over the standard work week. Compensation/ salary systems are designed to ensure that employees are rewarded appropriately depending on what they do and the skills and knowledge (intellect) required for doing a specific job. It must therefore provide for the following key factors in order to be effective: The following factors may be helpful to raise the effectiveness of employees • Signal to the employee the major objectives of the organizations – therefore it must link to the overall goals and objectives of the company. For example if doing a quality job is critical for the company its compensation system has to ensure that this is
A company that rewards loyalty would reward employees who stay longer in the company with significantly better incentive programs. The secondary objective is to design and implement an equitable labour-cost structure. therefore. Managing Wages The main purpose of wage and salary administration is to establish and maintain equitable wage and salary programs. • Attract and retain the talent an organization needs – the need to benchmark salaries to the prevalent market standard for that job /skill so that the company is able to attract the right talent.adequately rewarded. therefore ensuring that compensation is appropriately disbursed need to be taken care of while designing the compensation system. profits maximised and conflicts minimised. On the other hand if a company values productivity and units produced. the probability that suitable candidates would take the job offer and join thecompany. A performance driven culture would build compensation policies that clearly and significantly reward performance. Even if they do join subsequently when they find that the market pays more for that job they would quickly find a more remunerative job and leave the company • Motivate employees to perform effectively – as discussed at the outset. production setups would focus on higher incentive policies that would motivate the employee to produce more while the base-salary would be low. money is a key motivator and it often might be the only motivator for most employees. Hence we see how compensation systems are reflective of the organizations over all philosophy of what its goals and objectives are and how this can be linked to salary payout. • Create the type of culture the company seeks to engender – compensation systems play a critical role as sponsors for the organizations culture. Therefore payout cannot be out-ofsync with the organizations ability to pay it needs to be able to satisfy the employees as well as employers. the compensation system would be designed such that productivity is rewarded. analyse and interpret the needs of their employees so that reward can be suitably designed to satisfy these needs. Jobs in the brick and motor. motivation and rewards. We . Managers. If a enterprise pays a salary lower that what the market does for that job/responsibilities. Wage and salary administration is concerned with the financial aspects of needs.
Wages are commonly understood as price of labour. The word pay refers to the payment for services done which would include salary as well as wages. Wages represent the amount of value created in the production which remains after payment has been made for all these factors of production. a definite amount remains for labour.. capital and entrepreneurship. wages tend to settle at a level just sufficient to maintain the workers and his family at minimum subsistence levels. According to this theory. According to this theory. wages are determined not by subsistence level but also by the standard of living to which a class of labourers become habituated. Benham defines wage as a sum of money paid under contract by an employer to a worker for services rendered. any remuneration paid for services is etymological wage. wages depend upon the demand and supply of labour. Certain theories were propounded for determination of wages but these could not stand the test of time. The theory applies only to backward countries where labourers are extremely poor and are unable to get their share from the employers. Standard of living theory: This theory is a modified form of subsistence theory. The total wage fund and the number of workers determine the average worker's share in the form of wages. In other words. The payment towards manual or mechanical work is referred to as wages. Demand and supply theory: According to this theory. labour. also known as 'Iron Law of Wages'. Marginal productivity theory: This is an improved form of demand and supply theory. According to him.will now review a few of the important theories that support the design of wage systems. The wage fund theory: According to this theory. Walker (1840-1897) propounded this theory. labour is the residual claimant. after rent and raw materialsare paid for. Residual claimant theory: Francis A. In ordinary parlance. Labour was always looked upon as a commodity governed by the law of supply and demand. was propounded by David Ricardo (1772 -1823). there were four factors of production/ business activity viz. A few theories are discussed below: Subsistence theory: This theory. Wages are determined by the value of the net product of the marginal unit of labour . land. The word 'salary' is defined in the Oxford Dictionary as „fixed periodical payment to a person doing other than manual or mechanical work‟.
8. The degree of skill. output will go down. job differentials and individual differences tend to be determined by the relative strength of the organization and the trade union. The training involved. The experience involved. Purchasing power theory: According to this theory the prosperity.employed. 3. fringe benefits. . 5. 7. some of the goods will remain unsold. According to him. The hazard attendant on the work. The responsibility undertaken. 6. basic wages. 4. which will result in unemployment. demand will be good. productivity and progress of industry depend on there being sufficient demand to ensure the sale of its products and pocketing of reasonable profits. The bargaining theory of wages: John Davidson propounded this theory. if wages and the purchasing power of the workers are low. The disagreeableness of the task. and 9. 2. However. The Tribunals and Wage Boards have generally followed the-principles laid down in the Fair Wages Committee's Report on fixing wages. has focused on wage differentials and has identified the following factors for consideration for fixation of wages : 1. in its report. A large pact of the products of industry is consumed by workers and their families and if wages are high. When a trade union is involved. The strain of work. The fatigue involved. wages are determined by the relative bargaining power of workers or trade unions and of employers. The Committee. The mental and physical requirements.
. Texas is a medium size. Suggest few measures to avoid grievances. it might lead to severe consequences. in spite of making Profit. plastic manufacturing company. Imagine this situation and explain the grievance handling procedure. It is expected that. if the grievances are not dealt. list each steps of the procedure.3 Define competency.2. In this Company.Q. For past 2 years. Company is not paying bonus to the workers. Q. How competency is linked to Human resource system. workers have developed grievances against management.
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