Wage and Salary

Administration
 Employee Compensation
• Employee Compensation includes:-
• Base or primary compensation, and
• Supplementary Compensation
• Base or primary compensation –
• Refers to basic pay in the form of wages and salaries. It is 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.
Objectives of Wage and Salary Administration
• To establish a fair and equitable remuneration
• To attract competent personnel
• To retain the present employees
• To improve productivity
• To control costs
• To improve public image of the company
 Essentials of Sound Wage and Salary
Structure
• Internal Equity
• External Competitiveness
• Built-in Incentive
• Link with Productivity
 Methods of Wage Payment
• Time Wage System
• Piece Wage System
 Time Wage System
• Time Wage System –
• Wages are paid on the basis of time spent on the job irrespective of the amount
of work done.
• The unit of time may be a day, a week, a fortnight or a month.
• Also known as “Day Wage System”.
 Piece Wage System
• Piece Wage System –
• Remuneration is based on the amount of work done or output of a worker.
• One unit of output is considered as one piece and a specific rate of wage is paid
per piece.
• Also called “Payment By Results”.
 The Process of Wage Determination
• Job Analysis – Job Description and Job Specification
• Job Evaluation – Relative worth of the Job
• Wage Survey – Conducted to find wage/salary levels prevailing in the region or
industry
• Developing Wage Structure – equitable wage structure is prepared
• Wage Administration Rules – Rules involving wage administration are prepared
• Employee Appraisal – Evaluate the performance of individual employees to
reward merit and performance.
 Components of Pay Structure
• Basic Wage/Salary
• Dearness Allowance
• Bonus and other incentives
• Fringe benefits or perquisites (Telephone, housing, entertainment allowances,
sponsoring EDPs)