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Managing Basic

Objectives

Components of Employee Remuneration

Theories

of Remuneration Model

Consequences of Pay Dissatisfaction Influencing Factors of Remuneration

Remuneration

Identify the different components of remuneration Describe the theories of wage and salary payments Identify the variables that influence employee remuneration Point out the wage policy of Government Explain the wage concepts Explain how special groups can be compensated

Environment

Remuneration

Financial

Non-financial Job Context Challenging job Responsibilitie s Recognition Growth prospects Supervision Working conditions Job sharing, etc.

Hourly and Monthly rated Wages Salaries

Incentives Individual plans Group plans

Fringe Benefits PF Gratuity Medical Care Accident Relief Health and Group Insurance, etc.

Perquisites Company car Club membership Paid holidays Furnished house Stock option Schemes, etc.

Direc t

Indirect

Reinforcement theory Expectancy theory Equity theory Agency theory

Performance Strikes Grievances Absenteeism Turnover

Desire for More Pay

Search for Higher Paying Jobs

Pay Dissatisfaction

Lower Attractiveness of Job

Job Dissatisfaction Absenteeism

Psychological Withdrawal Visits to the Doctor Poor Mental Health

Business Strategy

Market Position and Maturity

Remuneration Strategy

Blend of Remuneration

Invest to grow

Merging or growth rapidity Stimulate entrepreneurialism

High cash with above average incentive for individual performance. Modest benefits,

Manage earnings-protect markets

Normal growth to maturity Reward management skills Average cash with moderate incentives on individual, unit, or corporate performance. Standard benefits. Stress Below-average cash with small incentive tied to cost control. Standard benefits.

Harvest earnings-reinvest No real growth or decline elsewhere

Source: Wayne F. Cascio, Managing Human Resources, McGraw-Hill, 1995, p.352.

Job Description

Job Evaluation

Job Hierarchy

Pay Survey

Pricing Jobs

2003 IT ITES Telecom (Services) Insurance Banking (Retail) Manufacturing Pharma 15 23 10 23 12 6 20

2004
(Increase in percent)

17 25 12 25 15 7 22

Source: Business Today, September 12, 2004. p.46

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Skill-based Pay Monetary vs. NonMonetary Rewards Salary Reviews

Employee Participati on

Remunerati on

Pay Secrecy

Below Market or Above Market Rates Comparabl e Worth

Eliticism or Egalitarianis m

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Factors Pay structure Employers focus Employee focus Advantages Disadvantages

Job-based Based on job performance Job carries wage; Employee linked to job

Skill-based Based on ability to perform Employee carries wage; Employee linked to skills.

Job promotion to earn greater pay Skill acquisition to earn greater pay. Pay based on value of work performed Flexibility; Reduced workforce.

Potential personnel bureaucracy; Potential personnel Inflexibility bureaucracies; Cost controls.

Source: Raymond A. Stone, Human Resource Management, John Wiley & Sons, 1995, p.324.

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Minimum

wage

provides for sustenance of life but also

for preserving efficiency


Fair

wage wage

comparable with standard wages

elsewhere
Living
providing essentials plus certain

comforts
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