This document covers various topics related to wages and compensation, including: - Definitions of wages from different sources - Concepts of wages like money wages, minimum wages, and living wages - Economic theories of wages such as subsistence theory, surplus value theory, and marginal productivity theory - Behavioral theories of wages including hierarchy of needs and equity theory - Components of compensation including base pay, variable pay, and benefits - Factors that affect compensation - Objectives of an organization's compensation program The document provides an overview of key concepts and theories regarding wages and compensation.

2. Content to be Covered -
 Introduction to Wages
 Concepts of Wages
 Theories of Wages
 Concept of Compensation
 Components of Compensation
 Factors affecting on Compensation

3. Introduction to Wages
 Wages – payment of compensation in return for work
done.
 Wages – Employer – perceives – as a cost of business
efforts.
 Wages – Employee – perceives – means for satisfying
their needs and maintain standard of living.

4. Definition of Wages
 According to Benham “Wages means the amount paid
to the labour for his services to the Employer”.
 According to P. M. Stohank “ Wages is that Labour’s
remuneration which creates the utility.”

5. Concepts of Wages
1) Money wages and Real wages
2) Minimum Wages
3) The Living Wages
4) Fair Wages

6. Wage Theories (Economic & Behavioural Theories)
Wage theories mainly divided into two parts:
A) Economic theory
B) Behavioral theory

7. Economic Theories of Wages
 SUBSISTENCE THEORY (Given by DAVID RICARDO in 1772-1823)
 THE SURPLUS VALUE THEORY (Given by KARL MARX in 1818-1883)
 THE WAGES FUND THEORY (Given by ADAM SMITH in 1723-1790)
 THE MARGINAL PRODUCTIVITY THEORY (Given by J.B.CLARCK)
 THE BARGAINING THEORY (Given by JOHN DAVIDESON)
 DEMAND AND SUPPLY THEORY (Given by MARSHALL)
 PURCHASING POWER THEORY (Given by PIGOUN)
 COMPARATIVE ADVANTAGE THEORY

8. Behavioural Theories of Wages
Behavioral theories are divided into three categories:-
 Content theories
 Process theories, and
 Contemporary theories

9.  A) CONTENT THEORIES –
 1.HIERARCHY OF NEEDS
 2.TWO FACTOR THEORY OF MOTIVATION
 3.ERG THEORY

10.  B) PROCESS THEORIES –
 EXPECTANCY THEORY
 C) CONTEMPORARY THEORIES –
 1. EQUITY THEORY
 2. ATTRIBUTION THEORY

11. Introduction to Compensation
Compensation may be defined as money received
in the performance of work, plus the many kinds of
benefits and services that organizations provides to
their employees.
Compensation offered by an organization can
come both directly through base pay and variable pay
and, indirectly through benefits.

12.  Objectives of Compensation:-
1. Attract & Retain talent
2. Ensure Equity
3. New & Desired Behaviour
4. Control Costs
5. Comply with legal rules
6. Easy to operate

13. Nature & Components of Compensation:-
Nature Component
Base Pay Wage and Salary
Variable Pay Bonus, Incentives, Stock Option
Benefits Insurance, Paid Leave, Pension & PF
contribution, Social security measures etc.

14. Types of Compensation
Direct Compensation
(Monetary/Financial)
Indirect Compensation
(Non – Monetary/ Non – Financial)
Wage & Salary, TA, DA,
HRA, LTA, special
allowances, bonus
Leave ,Overtime
Facilities, Insurance,
Transport facility,
Medical facility, flexible
timing, holiday package,

15. Factors affecting on Compensation

16. Reference Books
1) Personnel Management – Mamoria & Gankar
2) Modern HRM – Balyan & Balyan
3) Human Resource Management – K. Aswathappa