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OBJECTIVES:
A sound plan of compensation administration seeks to achieve the
following objectives:
- To control labor and administrative cost in line with the ability of the
organization to pay.
CLASSIFICATION OF WAGES-:
A)Minimum wages
B)Fair Wages
C)Living Wages
Salaries paid for jobs vary because of differences among jobs and in
the way people do their work. The relationship between jobs and
wages rates involves three considerations:
Individuals doing the same job differ in ability, experience, skill, and
efficiency. Some individuals are more capable of handling mental
tasks than others.
Some are more efficient in general than their co-workers. These
differences should be recognized through a merit rating systems and
provided for in a salary structure embodying a pay scale for each job.
In this way an employee who starts at the base rate for the job can
aspire for pay increases as he gains greater proficiency and
experience.
5. Labour costs-
6. Cost of living-
The purchasing power of the money that the employee receives from
his employer determines the amount of essential needs for decent
living that the employee could provide himself and his family.
7. Collective bargaining-
8. Labour Laws-
Some of the central laws which have a bearing on employee
remuneration are the Payment of Wages Act, 1936, the minimum
wages act 1948, payment of Bonus Act 1948.
4. Group Incentives
A straight salary plan is used when an employee is paid for the time
he spends on the job. The day, week or month is commonly used as
the basis for the time unit. Under the time unit plans, wages are not
determined directly by output so management has to depend upon the
worker to produce in return for his wages. His productivity depends
upon the foreman or supervisor who must maintain constant
surveillance over the worker’s operations.
2. Incentive Plans
4. Group Incentives
b. Bonus or Premium
PROFIT SHARING:
Cash Plan- At the time profits are determined, contributions are paid
directly to employees in the form of cash, checks, or stock. The
amount is taxed as ordinary income when distributed.
Combination Plan- In this type of plan the participant has the option
of deferring all or part of the profit-sharing allocation. That portion
taken as a deferral is placed into the participant’s account, where it
and investment earnings accrue tax free until withdrawal.
Purpose:
Triggers:
• Results of Govt. legislation & public policy – PF, gratuity,
workmen’s compensation, etc.
• Management Initiative – health, recreation, counseling.
• Union demands – co-operative stores/bank, housing, etc.
• Community relations – local conditions, puja gifts, holidays, etc.
2. Social Acknowledgement-
• Informal recognition
• Recognition at office get to-gathers
• Friendly greetings, smiles, e-mail
• Solicitation of advice, suggestions
• Membership of recreation club
• Use of company facilities for personal projects
3. Knick-Knacks-
• Desk accessories
• Company watches
• Tie pins,
• Diaries, calendars/planners
• Wallets
• T-shirts
4. Tokens-
• Movie tickets
• Vacation trips
• Coupons redeemable at shops
• Early time offs
• Anniversary, dating and birthday allowances/presents
5. Awards-
• Trophies
• Plaques
• Citations
• Certificates
• Scrolls
• Letter of appreciation
6. On the Job-
• More responsibility
• Job rotation
• Special assignments
• Training
• Representing the company in public
7. Monetary-
• Legally required – workers compensation, etc.
• Contingent and deferred benefits – pension and group
insurance
• Payments for time not worked – vacations, holidays
• Other benefits – travel allowance, car, uniform, meal,
discounts on goods/services, child care facilities, etc.
Fringe benefits:
Accommodation
Generally any employee, whether higher-paid or not, is provided with
accommodation either rent-free or for a very low rent.
Fuel
Fuel is generally provided to higher ranked employees.
Holidays
Higher-paid employees receive a free holiday. It is a basic
reimbursement.
Loans
Interest-free and cheap loans for higher-paid employees and directors
are given.
Meals
Meals are provided in a staff canteen which are either free or
subsidized and are available to all staff.
Traveling expenses
Employers reimburse the costs of traveling to and from work.