Unit III Wages

8/9/2019 Unit III Wages

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WagesWages--

Variable&SupplementaryVariable&SupplementaryCompensationCompensation

BY-PROF.RASHMI GUPTA


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Incentive PlansIncentive PlansyIncentive is anything that attracts a worker

and stimulate him to work. It can be financial

and non financial.

yUnder incentive wage system, the amount

payable is linked with the output.

y

The rationale behind incentives is tostimulate human efforts to higher

performance.


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RewardsRewards

ExtrinsicExtrinsic IntrinsicIntrinsic

ResponsibilityResponsibility

Interesting workInteresting work

Personal growthPersonal growthDiversity ofDiversity of

activitiesactivities

FinancialFinancialNonNon--

FinancialFinancial


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1: EXTRINSIC FINANCIAL1: EXTRINSIC FINANCIAL

REWARDSREWARDS

Wages

Bonuses

Profit-sharing

Vacations

Sick leave Purchase discounts


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2. EXTRINSIC NON2. EXTRINSIC NON--FINANCIALFINANCIAL

REWARDSREWARDS

Office furnishings

Lunch hours

Parking spaces

Work assignments,

locations

Business cards Secretary

Titles


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Guidelines for PFP (Pay ForPerformance)System


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Sound Policies

Scientific System for fixing standard Work Load

Workers Participation Simplicity

Definiteness

Wide Coverage

No Upper Limit

Follow-up


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RELATIONSHIP BETWEEN HR & REWARDRELATIONSHIP BETWEEN HR & REWARD

PRACTICES & BUSINESS PERFORMANCEPRACTICES & BUSINESS PERFORMANCE

JOBJOB

SATISFACTIONSATISFACTION

EMPLOYEEEMPLOYEE

INVOLVEMENT /INVOLVEMENT /

COMMUNICATIONCOMMUNICATION

BUSINESSBUSINESS

PERFORMANCEPERFORMANCE

HR PRACTICESHR PRACTICES


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What is Fringe Benefits? Benefit means membership based, non- financial or

financial rewards given to employees over and above

the normal wage or salary. It is known by variousnames such as fringe benefits, supplementarycompensation, etc.

The rationale behind benefits is to attract and retaintalented employees.


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Features of Fringe Benefits They are supplementary forms of compensation

They are paid to all employees.

They are indirect compensation. They help raise the living conditions of employees.

They may be statutory or voluntary.


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Objectives of Fringe Benefits

To meet the requirements of various legislationsrelating to fringe benefits.

To recruit and retain the best personnel. To increase and improve employee morale.

To create a sense of belongingness amongemployees.

To create and improve sound industrial relations.


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Employee

Benefits

Basic Benefits (Mandatory)

Annual Leave

Accident Disability Insurance

Maternity Paid Leave

Medical Insurance

Social Security

Old age or retirement benefits

FurtherIncentive Benefit (Non Mandatory)

Housing

Welfare & RecreationSubsidized Lunch

Transportation

Company Car

CareerEnrichment (Non-Mandatory)

EducationA

ssistanceReward forAdditional Certification

Monitoring & Counseling

Reward forAdvance Degrees

QualityofWork & Life (Non- Mandatory)

Paid & Unpaid Parental LeaveDay Care

Flexible Working Hour

MonetaryAssistance for elder Care

Employee BenefitCategories


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Policy Issues in Designing BenefitPolicy Issues in Designing Benefit

PackagesPackages

Policy Issues

Who will be

covered

Coverageduring

probation

Degreeofemployeechoice

Which benefitsto

offer

Whetherto

includeretirees

How tofinancebenefits

Costcontainment

procedures

Communicating

benefitsoptions


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Guidelines to Make Benefit

Programme More Effective

Benefits to be treated as an instrument in HRM.

Benefits to be aligned with the basic requirements of

the workers. The package should be flexible as per the

requirement of a given perspective.

Employees should be involved in the process ofdevising benefit package.

Additional benefits should be introduced after athorough evaluation.


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Benefits Vs. Incentives

Benefits are non financial and membershipbased whereas incentives are paid to specific

employees whose performance is abovestandard.

Benefits are available to all employees in theorganization, whereas incentives are available

to only to specific employees in anorganization.


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PERFORMANCE RELATED PAYPERFORMANCE RELATED PAY

It refers to the pay strategy where

evaluations of individual and

organisational performance have

significant influence on the amount ofpay increases or bonuses given to each

employee.

It is also known as incentive systems

where outstanding performers are will

receive the greatest rewards to

acknowledge their contributions


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Objectives of Pay for Performance

To improve organizational ability to attract high performers.

To induce a performance-oriented culture.

To help in upgrading skills of team members by increasing acompetitive environment.

It is an effective motivational technique and improvesproductivity.

It helps in linking overall compensation strategy with theorganizational strategy.


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Types of Pay for Performance Plan Individual Based Plans

Team Based Plans

Organizational Level Plans


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Individual IncentivesIndividual Incentives

Under a system of individual incentives, allUnder a system of individual incentives, all

or a portion of an individuals pay is tied toor a portion of an individuals pay is tied to

their performance.their performance.


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Group IncentivesGroup Incentives

Improve Organizational PerformanceImprove Organizational Performance

Organizational MeasuresOrganizational Measures

Measured PeriodicallyMeasured Periodically


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Organisation level Incentives

Organization wide incentive plans rewards employees onthe basis of the success of the organization over a specified

time period


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SystemsofWage Payment

Time Piece Incentive

GroupIndividual

Based onTime Based onProductivityPreistmans

BonusScanlon

PlanCo-

Partnership

Taylor

Merricks plan

Halsey

Rowan

Bedeaux

Emerson


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Emerson Efficiency Plan

Under this plan minimum time wage is guaranteed to all workers.Bonus is given at an increasing percentage beyond the prescribedlevel of efficiency.

Efficiency = Standard Time * 100

Time Taken

Bonus = 10% upto 75% Efficiency20% Upto 75%-100% Efficiency

30% Beyond 100% Efficiency


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Bedeaux Plan Under it standard time is fixed. The benefit of time saved

goes both to the worker and his supervisor in the ratio3:1.


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Taylor Differential Piece Rate Plan

Under this system 2 piece rates are laid down. Thelower rates for those workers who failed to completethe task within the allotted time and the higher rate forthose who complete the task within or less than theallotted time.

The standard output is established through time andmotion study.


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Merricks Multiple Piece Rate Plan

This plan offers three grade piece rates rather than twooffered by the Taylors plan.The basic feature of this

scheme are-

Upto 83% of the standard output workers are paid at

the ordinary piece rate.

83% to 100% at 110% of the ordinary piece rate. Above 100% at 120% of the ordinary piece rate.


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Group Based Incentive Plans

Preistmans Production bonus

yUnder this system, a standard is fixed in terms of units. Ifactual output exceeds the standard,the workers will

receive bonus in proportion to the increase.


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Co-Partnership

Co-Partnership is a system in which workers gets his usualwages, a share in the profits of the company and a share in themanagement of the company as well. In this scheme employees

participate in the equity capital of the company. They can haveshares either on the basis of cash payment or in lieu of other

incentives payable in cash like bonus.


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Scanlon Plan

This plan is essentially a suggestion scheme designed to involvethe workers in making suggestions for reducing the cost ofoperation and improving working methods and sharing in thegains of increased productivity.


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Organisation wide Incentive

Plans Profit Sharing

Profit sharing is an arrangement by which employees receive inaddition to wages, a share fixed in advance in the profit of the

enterprises.

Employees Stock Ownership plan

Under this plan the eligible employees are allotted companys shares

below the market price. The eligibility criteria may include length of

service, contribution to the department where the employee works, etc.


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THANKS

Documents

Unit III Wages