Chapter 7 Wage and Salary Administration

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Management 102- Ms. Placido

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Chapter 7 Wage and Salary Administration

  1. 2. 5 REASONS WHY EMPLOYEES STAY: 1. Pride in the organization.  People want to work for well-managed companies. 2. Compatible supervisor.  People may stay just to work for a particular individual who is supportive of them. 3. Compensation. People want to work for companies that offer fair compensation, including competitive wages and benefits as well as opportunities to learn and achieve. 4. Affiliation.  People want to continue working with colleagues they respect and like. 5. Meaningful work.  People want to work for companies that let them do work that appeals to their deepest, most passionate interests. References Harvard Business Review (2010). HBR Answers Exchange. Retrieved from http://answers.hbr.org/
  2. 3. Top-Five Reasons Why People Quit Their Jobs by  Gregory P. Smith 1. Management demands that one person do the jobs of two or more people, resulting in longer days and weekend work. 2. Management cuts back on administrative help, forcing professional workers to use their time copying, stapling, collating, filing and other clerical duties. 3. Management puts a freeze on raises and promotions, when an employee can easily find a job earning 20-30 percent more somewhere else. 4. Management doesn't allow the rank and file to make decisions or allow them pride of ownership. 5. Management constantly reorganizes, shuffles people around, and changes direction constantly.
  3. 4. Subtitle
  4. 5. <ul><li>Payment, usually paid monthly and usually expressed as an annual amount, made by employers to employees in return for work done. </li></ul><ul><li>Payment for labor or services usually according to contract. An equivalent or a return for something done, suffered or given. </li></ul>
  5. 6. <ul><li>This theory is based upon the fundamental concept that the labor is a commodity and we have to pay the price according to supply and demand. </li></ul>
  6. 7. <ul><li>It described as wage w/c permits the recipient worker to live in a manner in keeping with his position in the society. </li></ul><ul><li>The worker’s is the cost of living should be considered first in the cost of the production. </li></ul><ul><li>Is the basis in the implementation of minimum wage laws. </li></ul>
  7. 8. <ul><li>It proposes that the labor is a commodity like anything that could be bought at the price by the user. </li></ul><ul><li>It brings about the organization of labor union. </li></ul>
  8. 9. <ul><li>It implies the supply of labor in any given economy on the whole depends upon the total number of individuals who want to work and are available for work. </li></ul>
  9. 10. <ul><li>It tries to establish the relationship between wages and level of economic activity. </li></ul><ul><li>Propounds by Karl Marx. </li></ul><ul><li>It emphasizes that the labor is the source of all products and that without this important component, there could be no goods to human consumption </li></ul>
  10. 11. <ul><li>This theory based on the cost of living. </li></ul><ul><li>That the cost of living is dependent upon the economic needs of the family for the basic necessities of life for food clothing and shelter. </li></ul>
  11. 12. <ul><li>May be conducted through telephones and informal interviews </li></ul><ul><li>It uses questionnaires based on benchmark jobs that are also present in other companies and industries. </li></ul>
  12. 13. Example of Salary Survey
  13. 15. <ul><li>Establishing the boundaries of the pertinent labor market is the most critical step in in the survey procedures. It involves the selection of the industry, the region or area, or the firm to be included in the survey. </li></ul><ul><li>This will insure a representatives sampling of the jobs </li></ul><ul><li>selected as universal for a particular wage or salary survey. </li></ul>
  14. 16. <ul><li>Key jobs are the labor grades that are comparatively stable in duties and responsibilities. These are occupations that are common in most industries and scattered through the ladder of labor classification and commonly familiar to most people in the industry </li></ul><ul><li>This may be done through a set of questionnaires and supplemented by interviews to get the accurate information. The Information must be able to pinpoint the problem area that has to be addressed by the compensation level, compensation structure, and the terms of payment plan. </li></ul>
  15. 17. <ul><li>The data gathered will provide management with the opportunity of arriving at the arithmetical average, the median, and the rage rate paid and the supplementary wage data. </li></ul><ul><li>From Here the results are properly evaluated and the HRD prepares the corresponding recommendations to the management of the most appropriate action to take relative to the revision of the current wage structure. Participating companies are also provided with the summary of the findings to foster continuous cooperation. </li></ul>
  16. 19. 1. Whether the company should pay salaries above, below, or the same level, as the others in the same industry in the community are paying for the same jobs. 2. Whether the company should pay a single rate for each job, or slot the jobs into ranges or grades w/c would provide room for merit increases.
  17. 20. 3. How many pay grades or salary rages to use, and how wide each pay grade should be (from the minimum of the grade to the maximum). 4. What is the range of the amount in terms of money value that should be allotted for each salary grade.
  18. 22. <ul><li>It affect the workers’ earning and standard of living. </li></ul><ul><li>It eases the recruitment and maintenance of an effective labor force. </li></ul><ul><li>It develops employee morale and increases work efficiency. </li></ul><ul><li>It represents cost and competitive advantage in the industry. </li></ul>
  19. 23. <ul><li>It helps in preparing budgetary allocations and eases computation of salary adjustments and as an aid in short term and a long range plans. </li></ul><ul><li>It eliminates pay distortions and inequalities in employee compensation. </li></ul><ul><li>It establishes an equitable salary range for various jobs. </li></ul>
  20. 24. The main purpose of a formal wage and salary management plan is to have a systematic method of payment to ensure that employees receive fair wage and salary for the work they perform. <ul><li>There are 2 methods of paying salaries: </li></ul><ul><li>By the Time Worked </li></ul><ul><li>b. By the Amount of Worked Produced </li></ul>
  21. 25. <ul><li>By the Time Worked </li></ul><ul><li>Earnings do not fluctuate with the amount of work performed or with the quality of output. </li></ul><ul><li>Wages are computed in terms of unit of time. </li></ul><ul><li>It is common to pay workers by the day and the term day-work was adopted </li></ul><ul><li>H x R =W </li></ul>
  22. 26. <ul><li>2. By the Amount of Work Produced </li></ul><ul><li>Earnings depends on how much work the employee completed . </li></ul><ul><li>Piecework salaries are determined by the number of pieces produced or completed, and each piece is assigned a piece value that called piece rate </li></ul><ul><li>Formula N x U = W </li></ul>
  23. 27. <ul><li>Other information: </li></ul><ul><li>Labor and Wages </li></ul><ul><li>The type of job one does and the financial compensation he or she receives are very important in our society. </li></ul><ul><li>Job type is linked to status as is wealth. </li></ul>
  24. 28. <ul><li>Other information: </li></ul><ul><li>Classification of Workers </li></ul><ul><li>Blue Collar - Manual Laborers </li></ul><ul><li>White Collar - Office Workers </li></ul><ul><li>Pink Collar – Jobs associated with women like secretarial , nursing. </li></ul>
  25. 29. <ul><li>Other information: </li></ul><ul><li>3 Categories of Labor Grades </li></ul><ul><li>Skilled Labor – These are workers who have received specialized training to do their jobs. Exp. carpenters, electricians, mechanics etc. </li></ul><ul><li>Unskilled Labor – These are workers who have received no special training and have few specific skills. Exp const. workers, painters, factory assembly line etc. </li></ul>
  26. 30. Other information: 3 Categories of Labor Grades c. Professionals – elite of the labor grades, there are those workers who need an advanced degree to do their jobs. Exp. Doctors, lawyers etc.
  27. 31. A Faithful man will abound with blessings… -Proverbs 28:20

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