By

Nishant Singh(8360)
Ameya Joshi(8156)

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, Asias richest man, took a 66
percent pay cut to set a personal example of
moderation after Indias government called
for austerity in salaries of executives.
Unhappy with pay hike, IIT-M faculty begin
strike today

Concept of Wage and Salary

Administration

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

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

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

The Wage determination

Process

The Wage Determination

Process
Diagram
1)The Process of Job Analysis
2)Wage Surveys
3)Relevant Organisational Problems
4)Preparation of Wage Structure
5)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)

The Wage Line/ Wage

Curve
The wage line
The 6th Pay commission Report

Factors Influencing Wage &

Salary
Structure
&
The Organization's ability to pay
Administration
Supply & demand of labour
The prevailing market rate
The cost of living
Living wage
Productivity
Trade Unions Bargaining power
Job requirements

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

Administration of Wages &

Salaries

The administration should be controlled by the

Personnel manager or a Committee composed

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

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

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 Employees

Acceptance of a Wage Level,The Internal

Wage Structure,Wage & Salaries & Motivators

Minimum, Fair & Living

Wage

Minimum, Fair & Living

Wage
Statutory Minimum Wage
Bare or Basic Minimum Wage
A Minimum Wage
Living Wage
Fair Wage
The Need-Based Minimum Wage

Types of Wages
Time Rate
Piece Rate
Balance or Debt Method

Wage Differentials

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

Wage Differentials in
India

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

Executive Remuneration

EXECUTIVE
RENUMERATION
UNIQUE FEATURES OF EXECUTIVE
RENUMERATION
1)Cannot be compared towage schemes of
other employees
2)Cannot form unions
3)Secrecy
4)Not based on individual performance but on
organizational performance
5)Subject to statutory ceilings

Components of executive remuneration:

1)Salary: determined through evaluation and

serves as the basis for other benefits

2) Bonus: Related to performance, at a certain
percentage of profits
3) Incentives
4) Perquisites: medical care, free well furnished
accommodation, conveyance, servants,
company recreational area; mostly to make up
for the taxation

Some generalizations related to executive

compensation:
Satisfaction with pay is a function of
comparison with anothers pay
A managers 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

THANK
YOU!!