Wage

and
Remune
ration
system.
Element
of Cost
project.

Objective

The objective of this project was to study the factors which govern the
determination of wage levels in the organization also the method of
remuneration followed in that organization.
Method Used

The method used was a process of interview of the manager of the Human
Resource at Daimler Chrysler Company. There was a questionnaire prepared
on the basis of which various questions were asked to the representative of
the company and the relative information was collected.

The company information was obtained from the Daimler Chrysler web site
and the theory backdrop was obtained from the text books from the library
named Elements of Cost Accounting.

Daimler
Chrysler,
 Mercedes
– Benz,
India.

Introduction of the company

Daimler Chrysler Mercedes – Benz India Ltd.

With the aim to serve the customers in India with the latest products and
technological excellence from the Mercedes-Benz stable, DaimlerChrysler
entered the Indian market and set up Mercedes-Benz India Ltd. way back in
1994. In line with DaimlerChrysler's worldwide corporate philosophy,
Mercedes-Benz India Limited was been rechristened DaimlerChrysler India
Private Ltd.

DaimlerChrysler India is a 100% subsidiary of DaimlerChrysler group and

one of the first auto joint ventures set up in India. It has a long-term
commitment to the Indian market and has full support of its parent company
for its future plans in India.

DaimlerChrysler is aware of the future potential of the Indian automobile

market and the tremendous economic power this country can generate. The
company is targeting 25% of the total turnover from Asia and thus
DaimlerChrysler India intends to play a definite role in the strategic forays
in this part of the globe.

Wide choice of Mercedes-Benz products

In the last few years, DaimlerChrysler India has extended the product range
to the maximum possible offering our exclusive customers a variety of
Mercedes-Benz products. And the company has been a main contributor to
the expansion of the luxury vehicle segment in the Indian market. In January
2000, the company introduced Mercedes-Benz E-Class (W 210) 'Top of the
line' E 240 Petrol and E 220 CDI Diesel versions with a number of unique
additional features.

In addition to the company's own manufactured product range the Mercedes-

Benz S-Class, E-Class and C-Class, DaimlerChrysler India has further
expanded the product range to make variety of imported vehicles like
Mercedes-Benz SL-Class, M-Class, SLK, etc. available to discerning
Mercedes customers, thus living up to the expectations of the exclusive
customers. 'Wherever there is an inclination to own a Mercedes vehicle,
DaimlerChrysler India will provide a way!
The market trend in India in the last couple of years reflects a clear shift in
customer preference towards the latest technology, safety, comfort and
environmental compatibility. Keeping this in mind, DaimlerChrysler India
has been following the product extension strategy with total commitment
and offering the latest and most sophisticated technology.

Theoretical backdrop

Factors Affecting Wages

 Supply and demand :

The wage is a price paid to the workers for their services. It is basically true
that the wages paid to the workers will be determined by the demand and
supply in the employment market. However, it may not be rather possible to
draw supply and demand curves for each job in the firm.
 Existing Wages :
An organization should pay wages which are normally payable in the
particular industry or a specific area.

 Legal Provisions :
There are sometimes laws adapted by the government which compel the
employer to pay minimum wages to workers. Moreover, the government
intervenes in the settlement of industrial disputes. As such the wage levels
may also be influenced by the government.

 Ability to pay :
Some industrial concerns which are prospering and having a high level of
earnings, can pay highly attractive wages. In fact, the national commission
on labour states that the companies which have the ability to pay high
wages should pay high wages.

 Lobour Unions :
In the industrial concerns where the trade union is strong, the wage levels
will be generally high as the bargaining power of the workers is greater.

 Productivity :
It is true to a large extent that there is positive co-relation between wages
and productivity. It is generally observed that high wages can be productive.
Because, in the long run, it is only the firm with increasing productivity can
pay high wages.

 Cost of Living :
The cost of living is increasing due to inflation. Therefore, wages should be
raised so as to offset the impact of inflation on cost of living. Moreover,
there should be upward revision of wages so as to enable the workers
maintain high standard of living.

Remuneration Methods :
There are two types of remuneration methods followed, they are:
i. Time Wage system.
ii. Piece Wage system.

i. Time wage system.

On the basis of this wage system the wages to the workers are paid on the
basis of the time spent in the organization.
This system is useful as it is easy to understand by the workers, it also
ensures a guarantee of some minimum wages and there is a sense of equality
and security. It also involves less clerical work and wage calculation is easy.

ii. Piece wage system.

Under this system the wages to the workers are paid on the basis of the
pieces ( units ) produced by the workers while in the factory.
This system is useful as there is direct stimulus to the workers to increase
production, as wages are directly dependent on the units produced. The
workers stay interested in the work and so the morale stays high. The
efficient workers are paid incentives and the wastage also reduces.

Actual Findings :

 System followed :

The company Daimler Chrysler which has an assembly line at pimpre

follows the time rate wage system. The core reason being that at the
company there are not many units produced and only one worker does not
produce the whole car by himself.
 Advantages to system followed :

At the company they follow the time – wage system as they do not pay
attention to the products produces as there are very less total fully produced
products in a year and moreover, only one worker does not produce the
whole entire unit ( the car ). So keeping in mind the quality of the product to
be produced the time wage proves to be very efficient.
Moreover, under proper supervision the workers can produce proper quality
products and so Daimler Chrysler as they are known for their quality and
perfection with elegance is maintained though taking appropriate time.

 Determination of wages.

The wages that are paid to the workers of the production unit are dependent
on the minimum wages payable by the firm and as the performance and the
seniority of the employee increases, the workers are paid more based on the
improved skills, new skills learned and also their performance in the unit.
All the workers working at the base level in the assembly line are paid the
same wages even though that their work is different as per their skills.
For E.g. the painter, the molder, the technician, welder, etc.

 Expectations at work.

The company Mercedes – Benz expects that their workers work with high
performance and show quality work because the here producing such costly
cars there is the criteria that the customer is ready to wait as he is spending a
large amount on the product, so he demands quality and perfection.

 What if the expected performance is not met ?

There is internal assessment of the employees and there is a counselor to

whom the employees can talk and sort out their problems.
Moreover, Lobour union is also there in existence and there is a meeting
with the union representatives and the manager of the H.R to talk about their
problems and so the workers can voice their problems and thus they are
discussed and a solution is reached. This meeting is held every fortnight.
 Revision of wages

The revision of the wages paid to the workers is normally made every
alternate year at Daimler Chrysler. This revision is always upward and so the
workers get an increment in their wages every alternate year that can be said.
Moreover, if the worker has learned any new skill than he is given incentives
like bonuses, this also holds true if the worker has improved his performance
from the last time of revision.

Daimler Chrysler, India, plant situated at Pimpre has a workmen strength of

around 350 workers working in the assembly line for producing one of
globe’s best cars. To-day the situation is this that almost all the workers
working there have been employed for more than 10 years. Some of them
even started as young as when they did just their learning of special skills
after their grade 10. And slowly as their work improved and/or as they
improved their skills they get slowly promoted and there is a stage where the
baseline worker can become the manager of the assembly. Of course
everybody that has been working cannot become the manager but yes that is
possible. So there is gradual increase in the payroll and the workers get
boosted to perform.
Of course if a employee has acquired higher education than he would be
given a job with high work profile depending on the technical and skillful
knowledge of the candidate.

Summary and conclusions

The framework of the wage system in any organization is very important

part of any unit of production and so there are many factors that taken into
consideration while determining the wages of the workers in the unit. The
wages have to be designed in such a way that the workers are ready to work
happily for the offered rate and they feel secured for their work, which
proves to be important for a better work at the unit.
At Daimler Chrysler the wage system based on the time basis proves to be
appropriate and so there is no rigidity that only a particular wage system has
to chosen but the system that would prove beneficial for the firm should be
selected. Here the workers are not worried about the fast production as they
are paid on the basis of time spent in the factory so better and proper
performance is achieved, along with efficiency and quality.

There are always two types of workers at the assembly line the blue color
job workers, who work as laborers in the assembly line and the white color
job workers, ho carry out the office work. The wage system for both types of
workers is completely different and different criteria are taken into
consideration.

Thus the wage system for any type of firm should be selected wisely and the
wage structure has to create after proper thinking because the wages paid
play a very important role in maintaining the workers in the firm and also to
gain higher performance. It should be selected on the factors favorable to the
type of firm it is and so the best results could be obtained…

Done by :
Eshee
t
M.
Modi.
 Fy E
Roll no. 1280