Theoretical Perspective of Wage and Salary Administration

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Field Study 2010

INTRODUCTION OF THE STUDY NEED FOR THE STUDY : The wage and salary administration plays a vital role in Human Resource Management. The Human Resource Management is also plays a vital role in any organization. One of the biggest factors affecting industrial relations is the salary or wage of an employee receives for a fair day’s work. It is necessary to understand clearly the implications of various concepts and `principles that are related to the area of wage and salary administration. The wage and salary structure is the most important element in the Management of the employees. It includes areas as job evaluation, maintenance of wage structure, incentives, profit sharing, supplementary payments and control of compensation and other related pay items. The attention has been devoted to the study of internal structure and Human Resource Management Policies.

Need for Sound Salary Administration:

Management has to formulate and administer the salary policies on sound lines as: Most of the employees’ satisfaction and work performance are based ALVA’S COLLEGE, MOODBIDRI Page 67

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Field Study 2010 on pay. Internal inequalities in pay are more serious to certain employees. Employees compare their pay with that of others. Employees act only to gross external inequalities. Employee comparisons of pay are uninfluenced by levels of aspirations and pay history. Employees compare the pay of different di fferent employees with their skill, knowledge, performance, etc. Evaluating the unsatisfied wants and unreached goals of the employees. Finding out the dissatisfaction arising from unfulfilled needs and unattained goals. Adjusting the salary levels accordingly with a view to enabling the employees to reach unreached goals and fulfill the unfulfilled needs.

OBJECTIVES OF THE STUDY To know about the Wage and Salary administration of the CICBChemicon Pvt Limited, Baikampady, Mangalore. To know about the different types of allowances all owances in the CICB-Chemicon















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Field Study 2010 To assess the employees perception about the Wage and a nd Salary structure of the company. To identify problems, if any, in the Wage and Salary administration of the company and to make suggestions.

METHODOLOGY OF THE STUDY

The information for the study has been gathered from two sources namely 

Primary data



Secondary data



Primary data: Primary data have been collected through personal observations, discussions and interviews with various officials and management and from the Human Resource Department. To evaluate the effectiveness of Wage and Salary administrations of the company a survey was conducted on a sample of 30 employees. For this purpose, a structured















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Field Study 2010 drawn.



Secondary data: Secondary data have been collected from the books, company c ompany records, manuals and the reports provided by Human Resource Department, websites and magazines.

FRAME WORK OF THE STUDY The Project Work has been organized in five Chapters: The First chapter deals with the theoretical perspective of wage and salary administration, followed by objectives, methodology frame work and limitations of the study. The Second Chapter contains profile of the CICB-Chemicon Pvt Limited. The Third Chapter contains profile of CICB-Chemicon Pvt limited, Baikampady, Mangalore. The Fourth Chapter deals with wage and salary administration in CICBChemicon Pvt limited, Mangalore.















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Field Study 2010 LIMITATIONS OF THE STUDY

Time had been a constraint for completion of present study and making out a detailed analysis. The present study is limited only to M/s. CICB-Chemicon Pvt limited, Baikampady, Mangalore. The employees are scared to quote their name and suggestions. The employees were not willing to give the detailed information, because of their busy work schedule. The study of project work was only 6 weeks. This period is not sufficient to cover entire area.

THEORETICAL OF

WAGE

PERSPECTIVE AND

SALARY















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Field Study 2010 Comp Compe ensat nsatio ion n

Manag anage eme ment nt..

The The

soun soundn dne ess

of

Compe ompens nsat atio ion n

Management depends upon the amount of Wage and Salary paid to an Emplo Employe yee e for for a fair fair days days work work.. Desp Despit ite e the the conc conclu lusio sions ns of mora morale le studies wage or salary is significant to most of the employees as it constitutes a major share of their income pay in one form or another is cert certai ainl nly y one one of the the main main spri spring ngs s of phys physic ical al ne need eds. s. It prov provid ides es recognition a sense of accomplishment and determines social status. Hence formulation and administration of sound remuneration policy to attr attrac actt and and reta retain in righ rightt pers person onne nell in righ rightt posi positi tion on is the the prim prime e responsibility of any organization. Wage And salary Administration is essentially essentially the application application of a systematic approach to the problem of ensu en suri ring ng that that em empl ploye oyees es are are paid paid in a logi logical cal,, equi equita tabl ble e and and fair fair manner.

Wage: Wage and Salary are often discussed in loose sense, as they are used interchangeably. But ILO defined the term wage as “the remuneration

















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Field Study 2010 production and maintenance or blue collar employees.

Salary: The term salary is defined as “the remuneration paid to all clerical and managerial personnel employed on monthly or annual basis.” “The direct compensation paid to an employee compensating his services to an organization”. Salary is also known as ‘basic pay’.

Earnings: Earnings are the total amount of remuneration received by an employee during a given period. These include salary (pay), dearness allowance; house rent allowance, city compensatory allowance, other allowances, overtime payments etc.

















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Field Study 2010 Real Wage: Real wage is the amount of wage arrived after discounting Nominal Wage by the living cost. It represents the Purchasing Power of Money Wage.

Take Home Salary: It is the amount of salary left to the employee after making authorized deductions like contribution to the provident fund, life insurance premium, income tax charges, and other charges.

Minimum Wage: It is the amount of remuneration, which could c ould meet the “normal needs of the average employee regarding as a human being living in a civilized society.”

















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Field Study 2010 Statutory Minimum Wages: It is the amount of remuneration fixed fix ed according to the provisions of the Minimum Wages Act, 1948.

The Need-Based Minimum Wage: It is the amount of remuneration fixed fix ed on the basis of norms accepted at the 15th session of the Indian I ndian Labour Conference held at New Delhi in July 1957. The Conference recommended that minimum wages should ensure the minimum human needs of industrial workers. The norms laid down by it are: In calculating the minimum wage, the standard working class family should be taken to comprise 3 consumption units for 1 earner, the earnings of women, children and adolescents being disregarded. Minimum food requirements should be calculated on the basis of a set

















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Field Study 2010 taken into consideration in fixing the minimum wage. Fuel, lighting and other miscellaneous items of expenditure should constitute 20 percent of total minimum wage.

The Living Wage: According to the committee on fair wages, the living wage is the highest amount of remuneration and naturally it i t would include the amenities which a citizen living in a modern civilized society is entitled to expect, when the economy of the country is sufficiently advanced and the employer is able to meet the expanding aspirations of his workers.

The Fair Wage: Fair wages are equal to that received by workers performing work of

















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Field Study 2010 increased production or saving in time tim e or material.

Wage Rate: It is the amount of remuneration for a unit of time excluding incentives, overtime pay, etc.

Standard Wage Rate: It is the amount of wage fixed for a unit of time fixed on the basis of job evaluation standards.

Rewards: An incentive or a reward can be any thing that attracts the workers attention and stimulates him to work. Rewards are of two types:



















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Field Study 2010 wage / salary, fringe benefits, welfare measures, m easures, promotions, incentives etc.

•

Financial Vs. Non-Financial Rewards: Rewards are two type’s viz., financial rewards and non-financial rewards. Financial Wages/Salaries, allowances, incentive payments, bonuses, profit sharing etc. Non-Financial



















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Field Study 2010 Membership rewards are allocated to all employees as they are the employees of the organization. These include basic salary or pay, dearness allowance based on the cost of living index, house rent allowance, city compensatory allowance etc.

Fringe Benefits: Fringe benefits refer to various extra benefits provided p rovided to the employees, in addition to the compensation c ompensation paid in the form of wage / salary. These include employee benefits like Provided fund, Gratuity, Medical care, Hospitalization, Accident relief,



















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Field Study 2010 •

To establish a fair and equitable remuneration: There

should be internal and external equity in remuneration paid to employees. Internal equity means similar pay for similar work. External equity implies pay for a job should be equal to pay for a similar job in other organizations.

•

To attract competent personnel: A sound wage and

salary administration helps to attract qualified and hardworking people by ensuring an adequate payment for all jobs.



















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Field Study 2010 inline with the ability of the company to pay. It facilitates administration and control of pay roll.

•

To improve Union management relations: Wages and

salaries based on systematic analysis of jobs and prevailing levels are more acceptable to trade unions. Therefore, Sound wage and salary administration simplifies collective bargaining and negotiations over pay. It reduces grievances arising out of wage inequities.

•

To improve public image of the company: Wage, Salary



















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Field Study 2010 Wage and salary administration plans must always be consistent with overall organizational plans and programs. Wage and salary administration plans and programs should be in conformity with the social and economic objectives of the country like attainment of equality in income distribution and controlling inflationary trends. Management should ensure that employees know and understand the wage policy of the company. Workers should be associated in formulation and implementation of wage policy. All wage and salary decisions should be checked against the standards





















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Field Study 2010 2. Ability to pay: An organizational ability to pay its employees is an important determinant of wage level. Ability to pay depends upon the profit earning capacity of the enterprise. Multinational corporations pay relatively higher salaries due to their higher paying capacity. 3. Labour unions: well-organized trade unions exert pressure for higher wages and allowances. This pressure is exercised through





















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Field Study 2010 concerns annual increment in wages is based on merit. While in other companies pay increase every year without any relation to the performance of a worker. 8. State regulation: wage policy and law of the Govt. exercise a significant influence on Wage levels. Government has enacted laws to protect the interests of the working class. No organization can violate





















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Field Study 2010 of labour is determined by a traditional standard of living, which, in turn, is determined by the mode of production of the country concerned.” 

The Wage Fund Theory: According to J.S Mill, the wages are determined on the basis of the relationship between the amount





















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Field Study 2010 

The Bargaining Theory of Wages: According to this theory the wages and other terms of employment are determined on the basis of the relative bargaining strength of the 2 parties, viz., the employer and the employees. Webb’s stated that, “the haggling of the market which under a system of free competition and individual bargaining determines the conditions of





















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Field Study 2010 administration is job evaluation.

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Wage Fixation institutes in India: Collective bargaining and Adjudication CB is procedure in which Compromise is reached through balancing of opposed strengths. It is a means through which























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Field Study 2010 following factors:























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Field Study 2010 are analyzed. The data collected through job analysis is used to























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Field Study 2010 rather than merit. The frequency with which pay increments will























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Field Study 2010 ? To give maximum price to suppliers of sugar cane.























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Field Study 2010 Other safety equipment. Statutory Welfare facilities



















































































































































































































































































































































































































































































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Field Study 2010 sugars limited the employees working period is 60 years but the amount deducts up to 58 years only. The remaining two years there is no deduction from wages and pension is payable to that employee from 58 years age of the employee. Employer’s contribution for pension = 12% Employee’s contribution for pension= 8.33%

Calculation of pension amount: Pensionable salary × pensionable service Pension = 70 For example: 6500/- × 35 Pension = = 50 % =3250/7

Calculation of gratuity: P.F wages × no of years service × 7 or 15 Gratuity = 26

SUMMARY The Human Resource Department of an organization is very much significant in establishing itself as a brand. The past one year has seen an increasing number of companies focus on















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Field Study 2010 Human Resource management is now regarded as a “must” for the successful running of a business or industrial enterprise. HRM helps management at enterprise level, industrial level and at societal level. The basic purpose of wage and salary administration is to establish and maintain an equitable wage and salary structure and maintenance of an equitable labour cost structure. So that satisfaction of employees and employers is maximized and conflicts minimized. The wage and salary administration concerned concerned with the financial aspects of needs. The needs of the employees so that reward can be individually designed to satisfy some need. Before they do anything, they look for a reward (or) pay-off. The reward may be money (or) promotion, but more likely it will be some pay-off a smile acceptance by a peer, receipt of information, as kind word of recognition etc. According to “Beach, Wage and Salary Programmes have four major purposes. To recruit persons for a firm. To Control Pay roll Costs. To satisfy people, to reduce the incidence of quitting, grievances and fractions over pay. To motive people to perform better. The study has been taken up with the following objectives: To know about the Wage and Salary administration of the CICB Chemicon Pvt limited, Baikampady, Mangalore. Mangalore. To know about the different types of allowances in the CICB Chemicon Pvt limited, Baikampady, Mangalore.To study about the employees’ Pay structure in the company. To assess the employees perception about the Wage and Salary structure of the company. To identify problems, if any, in the Wage and Salary administration of the company and to make suggestions. The data for the study have been collected from primary and secondary sources. As part of primary data, a survey has been conducted on the employees of CICB Chemicon Pvt l imited,















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Field Study 2010 from text books, magazines, company records and websites.

FINDINGS The following are the findings: ? The additional cane price given by the NCS sugar’s limited is good and attracts the farmers. ? NCS sugar’s limited, latchayya peta, is paid wage and salary according to the wage board. ? NCS sugar’s limited, latchayya peta management must ensure the employees know and understand about the wage agreement. ? Half of the respondents are satisfied with the receiving the bonous. ? It is observed that majority of the employees 98% are very much satisfied with the salary that they are receiving. ? Majority of the employees opinioned that their job was good, 17% however said that it is average. ? It is found that, majority of the employees are feeling good about the overtime salary. While, 16% of employees felt that it is average, 10% however felt that it is poor. ? Majority of the employees 79% are feeling good about the house rent allowances that are provided by the company. ? Majority of the employees 81% have the more satisfaction regarding the salary increments rest of the responsents responsents not satisfied. ? It is observed that majority (81%) of the employees opined opined that the increments given are good. ? Most of the the employees are very much satisfied with the payment of the salaries in time. ? NCS sugars limited conducts social activities like eye camp and so on.















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Field Study 2010 CONCLUSION The employees of the NCS sugra’s Limited are more satisfied with their wages and salaries. The wage and salary structure and employee benefits and services is one of the vital area of personal administration for sound wage and salary policies and programmes are essential to maintain, develop, promote and transfer employees and to get effective results from them. Wage and salary structure are perhaps the most important single element in the condition of employees. Organizational Organizational morale cannot be maintained at high level without a fair equitable and sound remuneration programme. The wages and salary administration in NCS sugra’s Limited is a big task and it is being managed by inviting lot of human resources. The little attention has been devoted to study the internal structure and Human Resources Management policies. Therefore it is felt that the study relating to wage and salary administration in NCS sugra’s Limited help and understand understand and analyze the practices. Thus, policies and practices of wage and salary administration should be structured effectively and efficiently.

SUGGESTIONS ? NCS sugar’s Limited management must to says to workers how much percentage to cut their salary under the PF. The management must to essentiate the PF with wages or salaries. ? NCS sugar’s Limited management ask the opinion of the employees, before the implement the wage agreement. ? NCS sugar’s Limited management should wage settlement with in five days after the month. ? NCS sugra’s Limited management should be increase the payment for VRS of the workers. ? The compnay follows consolidating wages for the newly recruiting employees. employees. But the salary under the wage board gives job security to the employees.















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Field Study 2010 BIBLIOGRAPHY BOOKS: Essential of the Human Resource Management and Industrial Relations -P.Subba Rao. Human Resource Management -Dr. C.B.Gupta. Library, Journals & personnel Department of CICB Chemicon Pvt Limited

WEBSITES: www.cicb-chemicon.com www.indiastat.com www.google.com

Theoretical Perspective of Wage and Salary Administration

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