WAGE AND SALARY

ADMINISTRATION
  One of the most important functions of Human
Resources is the payment of the proper salaries
and wages to all company employees. The pay
that the employees receive from their employer
THE ROLE OF is the very reason for their being in the job. The
pay provides them with strong incentives to do
HUMAN their jobs well and the rate of pay indicates
their status in the company.
RESOURCES IN  The function of the payroll in a company is
usually the wage and salary administration and
THE PAYMENT OF it is carried out by the Human Resources
Department. The most important duty of Human
SALARIES Resources 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
 Deal with the payment of labor employed in
competitive enterprises.
 Wages represent the payment of one function of
production that is manpower.
 Profits and capital could not be attained without
the manpower that have 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.
THEORIES OF WAGES
1. Classical Wage Theory
Based upon the fundamental concept that labor
is a commodity and we have to pay the price according to
supply and demand. The greater the supply, the lower the
price and the greater the demand the higher the price.
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 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.
2. The Just Wage Theory of St. Thomas Aquinas
Described as wage which permits the
recipient worker to live in a manner in keeping with
his position in society. This doctrine is related to
social organization based on the status of the
individual in the social organization. According to this
theory, the worker's cost of living should be
considered first in the cost of production. Wages are
responsible for allocating labor to various
occupations.

3. The Wage Fun 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.

4. Bargaining Theory of John Davidson

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 sprite that is determined
by the bargaining process between the buyer and seller.
The sellers of labor are the workers and the buyers are 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.

5. The Marginal Productivity Theory

The marginal productivity theory offers the best
explanation of the wages in modern industry. The supply of labor
in any given economy on the whole depends upon the total
number of individuals who want to work and are available for
work. Workers' mobility, which is the transfer from one company
to another due to opportunities in the other company, affects the
structure of wages in the industry. It is not only the difference in
wages that makes the employee transfer to another company.
Better opportunities for advancement, more benefits, better
working environment, or even the corporate atmosphere are
other factors that affect mobility. In this juncture, it may be
surmised that mobility is not judged by the amount of movement
but the degree to which existing job differences call for worker
movement.

6. The Purchasing Power Theory

The purchasing power theory tries to establish the
relationship between wages and the level of economic activity.
The level of economic growth is dependent upon the savings
generated because the increase in wages creates a surplus that
propels growth. The more income the workers get, the bigger the
purchasing power for the workers; then this increases
consumption of goods and services. Increased consumption of
goods generates employment opportunities.
7. Labor Theory of Value
Karl Marx propounds this Theory of Labor. This
gives credence to the value of labor. It emphasizes that
labor is the source of all products and that without this
important component, there could be no goods for
human consumption. Every good that is produced could
be traced back to the participation of the worker and,
therefore, labor must get the greater share of the profit.
This is the philosophy of some organized labor groups
who are more active in the greater share of the profits of
company operations. These labor unions have the notion
that profits are the surpluses of the other factors of
production, and are pocketed by the capitalist
businessman making them amass wealth.
8. The Standard of Living Theory of Wages
A recent development in the 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 economic needs of the family for
the basic necessities 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 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 at par in quality and price.
 WAGE AND SALARY SURVEYS
Once the worth of a job has been established, using one of the job
ratings 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 use
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 should be
recognized that job title alone is not good enough for matching jobs. Each job title should be
accompanied with one paragraph job description so that it is possible to accurately compare
jobs.
STEPS IN CONDUCTING THE SURVEY:
1. 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 included in the survey.
2. List of key jobs and positions common to most firms in the survey. This will insure
a representative sampling of the jobs that will be selected as universal for a
particular wage or salary survey.
3. A detailed description of the key jobs and positions that are to be included in the
survey and that is common to most firms or industries. Key jobs are labor grades
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 the industry.
PROCEDURE IN CONDUCTING WAGE AND
SALARY SURVEYS
4. Collection of accurate wage and salary data. This may be done through
a set of questionnaires and supplemented by interviews to get the
accurate information. The information must be able to pinpoint the
problem area that has to be addressed by the compensation level,
compensation structure, and the terms of payment plan.
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.
WHAT THE PREVAILING SALARIES ARE IN THE COMMUNITY FOR
COMPARABLE JOBS, IT MUST THEN MAKE SEVERAL DECISIONS:AFTER THE
ORGANIZATION COMPLETES THE SALARY SURVEY AND FINDS OUT

1. Whether the company should pay salaries above, below, or 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 ranges
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. What is the range of the amount in terms of money value that should be allotted for
each salary grade.

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 points for key jobs in the
industry are plotted on the horizontal line of the graph. On the vertical line of the graph,
the range of pay is 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. Eye 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.
THE DEVELOPMENT OF WAGE AND SALARY
STRUCTURE
The design and operation of wage and salary
structure is the concern of management and
employees. Wage and salary structure is the hierarchy
of jobs to where the pay rates are attached. The
positions are allocated in pay grades according to the
job evaluation results and its relations with the pay
system derived from the results of the salary survey.
The jobs are ranked in ascending to descending order
according to their importance and based on the points
or rank earned in the job evaluation program
conducted by the HRD and the committee created for
the development of a more responsive pay system.
THE FOLLOWING ARE THE ADVANTAGES OF THE WAGE AND SALARY
STRUCTURE:

2. It eases the
1. It affects the workers' 3. It develops employee
recruitment and
earning and standard of morale and increases
maintenance of an
living. work efficiency.
effective labor force.

5. It helps in preparing
budgetary allocations and 6. It eliminates pay
4. It represents cost and
eases computation of distortions and inequities
competitive advantage in
salary adjustments and as in employee
the industry.
an aid in short term and compensation
long range plans.

7. It establishes an
equitable salary range for
various jobs.
WAGE STRUCTURE DESIGN
The design of the wage and salary structure is the
establishment of job classes and rate ranges. All jobs
within a class are treated in the same way for purposes of
economical administration. Pay structure ranges should be
used in developing a schedule for both rank-and-file
employees, technical and managerial positions. In some
companies, they have a separate structure for hourty and
daily paid employees and a separate salary structure for
regular monthly paid jobs. The managerial pay systems are
separated, and are based on rank, depending on their
assignments and contributions to the company's
profitability index.
WAGE STRUCTURE DESIGN
The number of pay ranges in pay structure depends on the company and on the number of
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. 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.
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 developing 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
that 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 of the job. When the employees meet the job requirements then they
are brought up to at least the minimum of the pay grade.
Another reverse situation is when the employee with high seniority, is
either so competent or has received so many increases that his salary is
above the maximum of the pay grade. This is called red circle rate,
which can be handled in two ways:

If the performance review reveals that the

Review the performance of the employee. If
employee is not worthy If the promoted and
the employee is doing superior work and is
such salary increase was discreetly earned for
capable of performing higher tasks or
some obvious reasons, then the employee will
responsibilities and has displayed potentials
not get normal merit ome se due to the
for promotion, then he has to be promoted
implementation of the new structure. As the
and given the salary grade corresponding to
range moves up due to cost of living index and
the new assignment. He should be under
the salary plan is revised accordingly, then his
probation in the new assignment for at least 3
salary probably will still fall within the range,
months before he is assigned to the new pay
and then he could be entitled to future
grade.
adjustments if deemed necessary.
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 its
employees on an hourly basis, and the other 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
In which H-Hours actually worked
R-Rate per hour in pesos
W-Total wages earned
2. By the Amount of Work Produced-earning 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 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:
In which N x U=W
N= Number of units produced
U= Rate per unit in pesos
W= 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.
Payment by piecework is satisfactory under
conditions:

2. When there is a
1. When a unit of clear relationship
completed work between a workers'
can be measured effort and the
easily; results of his
effort;

3. When the quality 4. When the flow

of work is less of work is regular,
important than breakdowns are
quantity, or when few, and jobs
quality standards follow a standard
are uniform and procedure, with
measurable; few interruptions.
 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 policy must appeal to all
employees and stimulate them to greater efforts.

Wage and These characteristics include the following:

Salary Policies 1.The wage and salary plan must be easily understood.
2.Salaries in the wage plan should be easily computed.
3.Salaries should be made relevant with efforts.
4.Incentives wage plan should provide payment for incentives
earnings to employees soon after they have been earned by
efforts exerted to reach standards.
5.The method of payment should be stable and unvarying.
Moral Renewal in the Workplace

1. Know that leaders have limitations.

Steven 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.“ .
He predicts that one or more of the four could result when a leader does not have the requisite character -
arrogance, aloneness, adventure- seeking or adultery.

2. Choose character.
John C. Maxwell is right in his observation that, "We have no control over a lot of things in life. We don't get to
choose our parents. We don't select the location or circumstances of our birth and upbringing. We don't get to pick
our talents and IQ. But we do choose our character. In fact, we create it every time we make choices."
In the workplace, you can create your own character. Do you want easy money or work for it? Do you keep the
right company? Do you stand by your principles? You can, if you choose to

3. Walk the talk.

Integrity is important in the workplace. In fact, many employers prefer to have employees with integrity first,
then, skills second. Skills can be taught but integrity is innate in one's character.
4. Avoid compromising.

While life is not black or white but shades of gray, there are instances when you have to choose between
right and wrong. A wrong can never be right even if a compromise is reached.

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 lazy, incompetent or immoral.

6. Face the mirror.

If you want one less scalawag in the workplace, reform yourself. Look for areas for improvement in your
character. If you have the guts, ask somebody you trust to tell you what is wrong with 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 just have to show them the mirror, too.
Some of them might have blind spots and can't see their mistakes, shortcomings, and
transgressions.

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 to chance the matter of improving yourself. Moral renewal does not happen by accident. You
must exert deliberate effort to mend the cracks in your character.

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 the
virtue you are trying to instill in yourself.

10. Rebuild and don't 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 four decades ago, "...ask not what your country can do for you; ask what you
can do for your country."
 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 or white collar employees were used to describe the
type of vocation.

Blue Collar-Manual laborers

White Collar-Office workers
Pink Collar - Jobs associated with women like nursing, secretarial, etc.
This, being a rather sexist term, is no longer used
TODAY WE CLASSIFY OUR WORK ROLES INTO THREE CATEGORIES CALLED
LABOR GRADES. THESE LABOR GRADES ARE DESCRIBED BELOW:

Skilled Labor - These are workers who have received specialized training to do
their jobs.
Unskilled Labor - These are workers who have received no special training and
have few specific skills.
Professionals - Arguably the elite of the labor grades, these are those workers
who need an advanced degree to do their jobs.

These labor grades are often said to be 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.
TWO THEORIES OF WAGES AND SALARIES
Traditional Theory of Wage Determination-In this theory the law of
supply and demand dictates salary. These days programmers are in
short supply and are in great demand; thus, they will command a
higher salary. Likewise doctors and lawyers whose specialized
skills people need command a high wage. If you looked at the bill
my electrician gave me you would know he is in demand!

Theory of Negotiated Wages - Those employees who work in

unions where the union negotiates salary on behalf of all workers
fit into this theory. Since I am a teacher my salary is set by
collective bargaining with my union. I may be the best teacher in
the world sought after by many students and parents but it
wouldn't matter.
THANK YOU!
Presented by: Group 4

Capacia
Padilla
Sacro
Delos reyes