This document discusses reward systems and their objectives in organizations. It explains that reward systems are critical parts of an organization's design that impact motivation, performance, skills, culture, structure, and costs. The key objectives of reward systems are attraction and retention of employees, motivation of performance, development of skills and knowledge, shaping of organizational culture, reinforcement and definition of organizational structure, and consideration of costs. It also discusses wages versus salaries and the principles of effective wage and salary administration in organizations.

2. Reward Systems are a critical part of any organization's design.
How well they fit with the rest of the systems in an
organization has an important impact on how effective the
organization is and on the quality of life that people
experience in the organization.

3. Attraction and Retention
Motivation of Performance
Skills and Knowledge
Culture
Reinforce and Define Structure
Cost
Objectives of the Reward System

4. Attraction and Retention Motivation of Performance Skills and Knowledge
Culture Reinforce and Define Structure Cost
Objectives of the Reward System
Overall, those organizations which give
the most rewards tend to attract and
retain the most people (Gerhart and
Milkovich, 1992). This seems to occur
because high reward levels lead to high
satisfaction, which in turn leads to lower
turnover.
When certain specifiable conditions
exist, reward systems have been
demonstrated to motivate performance
(Gerhart and Milkovich, 1992; Lawler,
1990; Lawler 1971; Vroom 1964).
Just as pay systems can motivate
performance they can motivate
learning and development. The
same motivational principles apply.
Individuals are motivated to learn
those changes which are rewarded.
Reward systems have the ability to shape
culture precisely because of their important
influence on communication, motivation,
satisfaction, and membership. The behaviors
they cause to occur become the dominant
patterns of behavior in the organization and
lead to perceptions and beliefs about what an
organization stands for, believes in, and values.
When people are rewarded the same
way it tends to unite them, when they
are treated differently it can divide
them. In addition, it can help define the
status hierarchy, and it can strongly
influence the kind of decision structure
which exists
it is important in
strategically designing the
reward system to focus on
how high these costs should
be and how they will vary as
a function of the
organization's ability to pay.

6. Wages
paid to blue-collar employees;
paid daily, weekly or monthly;
paid to jobs which can be
measured in terms of money’s
worth.
Salary
paid to white-collar employees; paid in monthly basis; paid to
employees whose contribution cannot be measured easily.

8. Salary is the fixed amount of compensation
which is paid for the performance of an
employee. Wage is the variable amount of
compensation which is paid on the basis of
hours spent in finishing a certain amount of
work
Salary is given to the skilled persons who apply
their proficiencies in respective fields and
generate the revenues for the firm. Whereas
wages are paid to the semi-skilled or unskilled
worker such as carpenter, welder, electrician,
etc. who work on hourly basis.
In the case of salary, the cost incurred is fixed
i.e. fixed amount is paid monthly. Whereas in
wages, the cost is variable, because it can vary
with the day to day performance of an
individual
Salary once decided, in the beginning, remains
fixed throughout. Whereas in wage system,
there is a wage rate that keeps on changing
and an individual is paid on the basis of
prevailing wage rate.
Salary is generally paid at fixed intervals i.e.
monthly. Whereas wages are paid on a daily
basis for the number of hours spent.
Salary is paid on the basis of the performance
of an individual. Whereas wages are paid on
hourly basis i.e. the amount of work done in
hours
Salary is paid to employees who possess the
skills and efficiencies in completing the office
work. Whereas wages are paid to the labors,
who are engaged in manufacturing processes
and do the work on an hourly basis.
Salary is given to those who are engaged in
administrative or office work job. Whereas
wages are paid to those, who are engaged in
manufacturing processes that require unskilled
or semi-skilled workers
A salaried person usually has KRA i.e. key
resultant area set for the month on the basis
of which their performance is judged. Whereas
the waged person does not have any KRA and
is judged on the basis of hourly work done
Salaried persons are not
paid additional
compensation for any extra
hours. Whereas wage
holder does get an
additional pay for the extra
hours devoted by him.

9. WAGE AND SALARY ADMINISTRATION

10. WAGE AND SALARY ADMINISTRATION
• A group of activities involved
in the development,
implementation, and
maintenance of a pay system.
• An ongoing process of
managing a wage and salary
structure.

11. WHY DO WE NEED
TO STUDY WAGE
AND SALARY
ADMINISTRATION?

12. • To have a scientific, rational, and
balanced wage and salary
structure.
• In a salary administration,
the employer should not
feel that the employees
are paid more than they
deserve and the
employees should not
feel that they are
underpaid.

13. The following principles should
be followed for an effective wage
and salary administration
1. Wage policy should be developed keeping in view the
interests of all concerned parties viz., employer, employees, the
consumers and the society.
2. Wage and salary plans should be sufficiently flexible or
responsive to changes in internal and external conditions of the
organization.
3. 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.
4. Wage and Salary administration plans must always be
consistent with overall organizational plans and programs.
5. 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.
6. These plans and programs should be responsive to the
changing local and national conditions.
7. Wage and Salary plans should expedite and simplify
administrative process.
8. Workers should be associated, as far as possible, in
formulation and implementation of wage policy.

14. The following principles should
be followed for an effective wage
and salary administration
9. An adequate data base and a proper organizational set
up should be developed for compensation determination and
administration.
10. The general level of wages and salaries should be
reasonably in line with that prevailing in the labor market.
11. 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.
12. The workers should receive a guaranteed minimum wage
to protect them against conditions beyond their control.

15. 9 Advantages of Wage and Salary
Administration |Company Management
1. Attract And Retain The Employees
2. Builds High Morale
3. Satisfied Employees
4. Labor Cost Equitable
5. No Favoritism/Bias
6. Clearly drawn line of promotion
7. Image of Progressive Employer
8. Harmonious Industrial Relations
9. Ensure Minimum Wages

16. THE ROLE OF HUMAN RESOURCES
IN THE PAYMENT OF SALARIES
• One of the most important functions of Human Resources is the payment of
the proper salaries and the wages to all company employees. The pay that the
employees receive from their employer is the very reason for their being in the
job.
• The function of the payroll in a company is usually the wage and salary
administration and it is carried out by the Human Resources Department.