Wage and Salary Administration

1. Wage and Salary Administration By Nishant Singh(8360) Ameya Joshi(8156)

2. News in the views…. • Corporate Affairs Minister Salman Khurshid, who yesterday favoured trimming pay packets of India Inc CEOs,earnestly advised them to lead a simple life saying. • Mukesh Ambani, Asia’s richest man, took a 66 percent pay cut to “set a personal example of moderation” after India’s government called for austerity in salaries of executives. • Unhappy with pay hike, IIT-M faculty begin strike today

4. Concept of Wage and Salary Administration

5. Concept of Wage and Salary Administration • Refers to the establishment & implementation of sound policies and practices of employee compensation • Includes areas as Job Evaluation, Surveys of Wages & Salaries, Establishing rules for administering wages, Profit Sharing, Wage changes & adjustments, Supplementary payments, Control of compensation costs

6. Purpose • To establish & maintain an equitable wage & salary structure and an equitable labour-cost structure. Other objectives include: • To recruit persons for a firm • To control payroll costs • To satisfy people, to reduce the incidence of quitting grievances, & fractions over pay, & • To motivate people to perform better

7. Important Definitions • Compensation: Money received in the performance of work , plus the many kinds of benefits and services that organisations provide their employees. • Wages (or PAY) The remuneration paid, for the service of labour in production, periodically to an employee • Difference between Wages and Salary Wages: Hourly/daily rate, blue collar workers Salary: weekly/Monthly rates, white Collar workers

8. The Wage determination Process

9. The Wage Determination Process • Diagram • The Process of Job Analysis • Wage Surveys • Relevant Organisational Problems • Preparation of Wage Structure • Wage Administration Rules: (advancement will be based on Merit or length of service? Frequency of pay increases? Information to be given to employees? Employee appraisal, fixing of wages)

10. The Wage Line/ Wage Curve • The wage line • The 6th Pay commission Report

11. Factors Influencing Wage & Salary Structure & Administration • The Organization's ability to pay • Supply & demand of labour • The prevailing market rate • The cost of living • Living wage • Productivity • Trade Union’s Bargaining power • Job requirements

12. Continued…. • Managerial attitudes • Psychological & Sociological factors • Levels of Skills available in the market

13. Administration of Wages & Salaries

14. The administration should be controlled by the Personnel manager or a Committee composed of high ranking executives. • Major functions of such a Committee are: • Approval and/or recommendation to management on job evaluation methods & findings • Review & recommendation of basic wage & salary structure • Help in formulation of wage policies from time to time • Co-ordination & review of relative departmental rates to ensure conformity, and • Review of Budget estimates for wage & salary adjustments & increases The Committee should be supported by information from other, technical staff.

15. Principles of Wage & Salary Administration • Differences in pay should be based upon variations in JOB REQUIREMENTS • Wages should be in line with that prevailing in the labour market • Equal pay for equal work • There should be recognition of individual differences in ability and contribution • There should be established structure for redressal of wage complaints • Wages should ensure a reasonable standard of living for the worker and his family • The wage structure should be flexible • WAGE COMMITTEE should be appointed for revision of wages

16. Theory of Wages • Subsistence Theory • The Surplus Value Theory of Wages • Residual Claimant Theory • Marginal Productivity Theory • The Bargaining Theory of Wages • Behavioural Theories: The Employee’s Acceptance of a Wage Level,The Internal Wage Structure,Wage & Salaries & Motivators

17. Minimum, Fair & Living Wage

18. Minimum, Fair & Living Wage • Statutory Minimum Wage • Bare or Basic Minimum Wage • A Minimum Wage • Living Wage • Fair Wage • The Need-Based Minimum Wage

19. Types of Wages • Time Rate • Piece Rate • Balance or Debt Method

20. Wage Differentials

21. Why the salaries offered in Bangalore and Pune are different in spite of the same job profile? • Occupational Differentials • Inter-firm Differentials • Inter-area or Regional Differentials • Inter-Industry Differentials • Personal Wage Differentials

22. Wage Differentials inIndia • In the unorganized labour market, personal differences tend to exist • The tendency appears to be towards the elimination of wage differentials • Wage differentials by sex are quite common • There has been a tendency towards the elimination of inter-firm differentials

23. Executive Remuneration

24. EXECUTIVE RENUMERATION UNIQUE FEATURES OF EXECUTIVE RENUMERATION • Cannot be compared towage schemes of other employees • Cannot form unions • Secrecy • Not based on individual performance but on organizational performance • Subject to statutory ceilings

25. Components of executive remuneration: • Salary: determined through evaluation and serves as the basis for other benefits • Bonus: Related to performance, at a certain percentage of profits • Incentives • Perquisites: medical care, free well furnished accommodation, conveyance, servants, company recreational area; mostly to make up for the taxation

26. Some generalizations related to executive compensation: • Satisfaction with pay is a function of comparison with another’s pay • A manager’s satisfaction with his current income and its motivational effect appear to be directly related to Anticipated pay raises • The choice of merit, as opposed to seniority, as the basis for determining salary rates tends to increase with education and position • The actual determinants of pay differentials seem to be job level supervisory experience and professional experience • Managerial incentive compensation has tended to become flexible

27. THANK YOU!!