1. Compensation management

2. MEANING
Wage and salary administration refers to the establishment and implementation of sound policies and practices of employee compensation. Thus, it is:-
administration of employee compensation.
systematic approach to provide monetary value to employees.
establishment and maintenance of equitable as well as cost-effective wage structure.

3. DEFINITIONS
“Wage and salary administration denotes the process of managing a company’s compensation programme.” - S.P. Robbins “ Wage and salary administration is essentially the application of a systematic approach to the problem of ensuring that employees are paid in a logical and fair manner." - Bewath & Reins

4. Definitions
COMPENSATION: Compensation may be defined by as money received in performance of work plus many kinds of services and benefits that organisation s provide to their employees.
Compensation may be classified into (a) Base or primary compensation and (ii) Supplementary compensation. Primary compensation refers to basic pay in the form of wages and salaries. It is a fixed and non-incentive payment on the basis of time expended on the job.
Supplementary compensation consists of incentive and variable payments, based on either individual output or output of the group as a whole.
WAGE: Wage is a general term referring to direct monetary compensation. It is also used specifically to refer to payments to service workers on the basis of hourly rated production.

5. Definitions (contd.)
SALARY: Salary refers to weekly or monthly rates paid to clerical, administrative and professional employees.
WAGE LEVELS: The wage levels represent the money an average worker makes in a geographical area or in his organisation. It is only an average. Specific markets, firms and individual wage rates can vary widely from the average.
WAGE STRUCTURE: The term ‘wage structure’ is used to describe wage relationships within a particular grouping. The grouping can be according to occupation or organisation such as wage structure of mechanics, carpenters etc.

6. PRINCIPLES OF WAGE AND SALARY ADMINISTRATION
In view the interests of all concerned parties
Should be sufficiently flexible
Should be made on ensure that differences in pay for job are based on variations in job requirements
Be consistent
Be in conformity
Should be responsive the changing local national conditions.
Should expedite and simplify administrative process
Be associated, as far as possible
Should be developed compensation determination and administrative
Clearly established procedure for hearing and adjusting wage complaints
Receive a guaranteed minimum wage to protect them conditions beyond their control.

7. CONCEPTS OF WAGES
Minimum Wage: wage which must be pays whether the company earns profit or not.
Fair Wage: Wage is the above the minimum wage but below the living wage.
Living Wage: The living wage is the highest among the three. It must provide :
Basic amenities of life
Efficiency of worker
Satisfy social needs of workers such as medical, education retirement etc.

8. Acquire competent personnel
Retain present employees
Provide fair and equitable compensation
Ensure desired behaviour
Keep labour costs in control
Keep organization ability in mind
Improve motivation and morale
Project good image of the organization
Impartial implementation

9. Factors influencing wagE and salary administration

10. PREVAILING MARKET RATES
ABILITY TO PAY
High profits : high wage rate
Low profits : low wage rate
DEMAND AND SUPPLY
Demand > Supply : high wage rate
Supply > Demand : lower wage rate
PREVAILING MARKET RATES
High market rates : high wage rate to retain good workers and vice – versa.
COST OF LIVING
High cost of living : higher wages
Low cost of living : lower wages

11. GOVERNMENT REGULATIONS
PRODUCTIVITY
High productivity : higher wages
Low productivity : lower wages
GOVERNMENT REGULATIONS
It may pass legislation for fixing minimum wages. For example : In India Minimum Wages Act, 1948
JOB REQUIREMENTS
Difficult job : higher wages
Easy job : lower wages
LIVING WAGE
Associated with the maintenance of adequate standard of living

12. BARGAINING OF TRADE UNIONS
Stronger trade unions : higher wages
Weak trade unions : lower wages
TECHNOLOGICAL DEVELOPMENT
Workers having updated knowledge : higher wages and vice – versa
MANAGEMENT STRATEGY
Strategy is to expand and grow : higher wages
Strategy is to maintain status quo : average wages
PSYCHOLOGICAL AND SOCIAL FACTORS
Fair wages : psychological and social satisfaction

13. PROCESS

14. 3. Assigning Pay Grades to Job
1. Job Analysis
Job description
Job specification
Grading and ranking the jobs
Value of a job is determined
At last, the job is given a price
2. Wage Surveys
To determine actual amount to be paid
Provides information about differences in wage levels
surveys through telephone, questionnaire, personal interviews etc.
3. Assigning Pay Grades to Job
Pay rates are assigned
Similar jobs are grouped together
Each group is assigned grade

15. 4. Preparing Wage Structure
Pay scales of industry
Higher payments or single grade
Number and width of pay grades
Jobs to be placed in each pay grade
Actual money value to be assigned to various pay grades
Differentials in pay grades
5. Wage Administration Rules
Determine the basis of advancement, frequency of pay increases, control
over wage costs, rules of promotion from one grade to another

16. METHODS OF WAGE PAYMENTS
TIME WAGE SYSTEM: Earnings = T*R
T stands for time spent R rate of pay.
SUITABILITY:
Productivity cannot be measured
Quality is more important than quantity
Individual employees don't have control over production.
MERITS
Simplicity
Security
Less wastages
Beneficial for beginners
DEMERITS
Wastage of time
No incentive for efficiency.
Low production

17. PIECE WAGE SYSTEM: Wages= Output*Piece rate
MERITS
Wages linked to efforts
Increase in production
Better Utilization of equipment
Distinction between efficient and inefficient
Less supervision required
Effective cost control
Better Planning and controlling
DEMERITS
No guarantee of minimum wages
Poor quality of goods
Not suitable for beginners
Cause of dissatisfaction
Opposition from unions
Difficulty in fixing piece-rates

18. TYPES OF PIECE RATE SYSTEM
Straight Piece Rate
Increasing Piece Rate
Decreasing Piece Rate
TYPES OF PIECE RATE SYSTEM

19. WAGE POLICY IN INDIA Payment of Wages Act, 1936
Industrial Disputes Act, 1947
Minimum Wages Act, 1948
Equal Remuneration Act, 1976
WAGE POLICY IN INDIA