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Wage Policy, Compensation and Benefits - Compensation And Productivity
Human Resources Management - Compensation And Productivity
Wage Policy, Compensation and Benefits - Compensation And Productivity
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Wage is the source of livelihood for the recipient employee while it is viewed as a production cost by the employer who pays it.
Wage Policy
Wage is the source of livelihood for the recipient employee while it is viewed as a production cost by the employer who pays it. Wage policies are principles acting as guidelines for determining wage structure. They are expected to insure minimum standards of comfort and decency to the wage-earners. A wage policy statement of a for-profit organization, usually contains references to the starting rates for all grades, instructions on when to hire below/above the starting rates, the wage period by which wages are payable, provision for severance pay, the period for which each wage revision would be applicable and whether increment is to be fixed amount or as a percentage of present pay.
Other points that may be covered in a wage policy may include the ratio of fixed wage versus variable pay, the ratio of gross pay versus ‘take home’ pay, the lower and upper limits of wages and perquisites, the wage differentials between the highest paid and the lowest paid worker, possibilities of profit-sharing and such other matters, as may be considered relevant. An organization establishes compensation policies that determine whether it will be a pay leader, pay follower or strive for an average position in the labour market.
Pay leaders are organizations that pay higher wages and salaries than competing firms. Using this strategy, an organization would aim to attract high-quality, talented and productive employees with whom they could achieve lowering of per unit labor costs. Pay followers are
A policy on wages, salaries or perks should cover the due date of subsequent review, the method of review, rules for hiring below the minimum, at minimum and above minimum rates, and the authority and control for making changes in wage patterns. The policies might also cover the percentage of raises permissible during promotions, the cost of living allowance (COLA) or the Cost of Living Indices and related adjustments to wages, rules for special raises, criteria for fixing annual increments based on merit and seniority and schemes of flexible payment and benefits.
Compensation and Benefits
A system of wage and salary administration should be carried out in such a manner that employees are attracted, retained, motivated, recognized, appreciated, treated fairly and equitably. Some organizations choose to pay high salaries and confine themselves with the statutory benefits. Some organizations try to offer unique and elaborate schemes of benefits while restricting their pay scales to the minimum levels permitted by market conditions. The system should also ensure accurate calculation of earnings owed to each of the employees for purposes like overtime, performance rewards, incentives payments and allowances, by the employer and make sure that pay is distributed in time and with proper records. The system should control costs, comply with the statutes and be easy to administer.
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