According to D. C. Beach, “Wage and salary
administration implies the establishment and
implementation of sound policies and principles of
Wages structure implies the wage rates for all the
jobs within an organisation, industry or local market
area. Generally, organisation maintain two parallel
wage or salary structures. One can be for hourly rated
and another cab be for salaried employees.
All organisation cannot have the same wage and
salary policy. Some organisation pay minimum
necessary to attract the desired number and kind of
workers. They just pay the minimum wage rate
according to the legislation in the existence. While some
organisation pay much more than that.
1. PRODUCTIVITY :
Productivity of a candidate or an employee is
very important factor which affects the wage or salary
rate. High wages and low costs are possible only when
productivity increases considerably.
Productivity differs from organistation to
organisation, industry to industry, region to region etc.
However, productivity is considered as one of the
important factors which affects the wage and salary
Factors influencing Wage and Salary
structure and administration :
2. Capacity of an organisation to pay :
Capacity or ability of an organisation to pay also
affects the salary and wage levels and wage structures.
The capacity to pay much depends upon the progress
of an organisation and the profits it earns.
Naturally those organisation which earn huge
profits also cab afford to pay much better wage rates to
their employees than the organisation which earns
comparatively less profit or earns merely marginal
3. Managerial Attitudes :
Managerial attitude also influence on the wage
and salary structure and wage and salary levels. R. A.
Lester, the expert in this field observed that the desire
of the top management to maintain or enhance the
prestige of its organisation is major factor in the wage
policy of many organisation.
4. Going Wage and Salaries :
The wages and salaries paid to the employees for
comparable jobs by other organisation in the industry
have an impact on the wage and salary policies, An
oraganisation’s wage and salary usually tend to
conform to the wage and salaries paid by other
oraganisation's in the industry.
5. Demand and Supply of Labour :
A price of any commodity is determined by its
demand and supply. The wage and salary rates are also
determined by the demand and supply position of the
labour in the labour market.
6. Cost of Living :
The employees must get sufficient amount of
pay in order to satisfy their wants and maintain a
certain standard of living. The cost of living pay
criterian is usually regarded as an automatic minimum
equity pay criterian. This criterian calls for adjustments
in payment of wages and salaries based increases or
decreased in an acceptable cost of living index.
Also other factors influencing wage and salary
Job requirements and the skill levels available in the
Trade Union’s Pressure, strategies and bargaining
Desire of an organisation to build their goodwill
Government Policy and Legislations