WAGE AND SALARY ADMINISTRATION: OBJECTIVES, PRINCIPLES

Wage and salary administration affect levels
of employee commitment to the organisation.
However, fascinating the individual’s job
assignment is, the employee must be paid. Pay
affects the way people work-how much and
how well. A large part of the compensation
that people receive from work is monetary.
Although managers are expected to conserve
money and distribute it wisely, many
employees feel that they should get more of it
for what they do. Wages, salaries and many
employee benefits and services are form of
compensation.
Administration of employee compensation is
called wage and salary administration.
According to D.S. Beach “Wage and Salary
Administration refers to the establishment
and implementation of sound policies and
practices of employee compensation. It
includes such areas as job evaluation, surveys
of wage and salaries, analysis of relevant
organizational problems, development and
maintenance of wage structure, establishing
rules for administrating wages, wage payment
incentives, profit sharing, wage changes and
adjustments, supplementary payments, control
of compensation costs and other related
items.”
The wage and salary administration aims to
establish and maintain an equitable wage and
salary structure and an equitable labor cost
structure.
Objectives of Wage and Salary
Administration :
A sound plan of wage and salary administration
seeks to achieve the following objectives :
To establish a fair and equitable
compensation offering similar pay for similar
work.
To attract competent and qualified
personnel.
To retain the present employees by keeping
wage levels in tune with competitive units.
To keep labor and administrative costs in
line with the ability of the organization to pay.
To improve motivation and morale of
employees and to improve union management
relations.
To project a good image of the company and
to comply with legal needs relating to wages
and salaries.
To establish job sequences and lines of
promotion wherever applicable.
To minimize the chances of favoritism while
assigning the wage rates.
Principles of Wage and Salary
Administration :
The following principles should be followed for
an effective wage and salary administration ;
Wage policy should be developed keeping in
view the interests of all concerned parties viz.,
employer, employees, the consumers and the
society.
Wage and salary plans should be sufficiently
flexible or responsive to changes in internal
and external conditions of the organization.
Efforts should be made to ensure that
differences in pay for jobs are based on
variations in job requirements such as skill,
responsibility, efforts and mental and physical
requirements.
Wage and salary administration plans must
always be consistent with overall
organizational plans and programmes.
Wage and Salary administration plans must
always be in conformity with the social and
economic objectives of the country like
attainment of equality in income distribution
and controlling inflation, etc.
These plans and programmes should be
responsive to the changing local and national
conditions.
Wage and salary plans should expedite and
simplify administrative process.
Workers should be associated, as far as
possible, in formulation and implementation of
wage policy.
An adequate data base and a proper
organizational set up should be developed for
compensation determination and
administration.
The general level of wages and salaries
should be reasonably in line with that
prevailing in the labor market.
There should be a clearly established
procedure for hearing and adjusting wage
complaints. This may be integrated with the
regular grievance procedure, if it exists.
The workers should receive a guaranteed
minimum wage to protect them against
conditions beyond their control.
Prompt and correct payments to the
employees should be ensured and arrears of
payment should not accumulate.
The wage and salary payments must fulfill a
wide variety of human needs including the
need for self actualization.
Wage policy and programme should be
reviewed and revised periodically in conformity
with changing needs. For revision of wages, a
wage committee should also be preferred to
the individual judgement however unbiased of
a manager.

References: Scribd.com