CHAPTER 7: WAGES AND SALARY ADMINISTRATION

The Role of Human Resources in the Payment of Salaries

One of the most important functions of the Human Resources is the payment of me proper
salaries and waites to all company employees. The pay that the employees Feverom their
employer is very reason for their being in the job. They Provide indicates their them with strong
incentive to do their jobs ell and the rate of pay indica and their positions status in the
company. The pay determines the standard of living and the community that they live. It
must be commensurated with their efforts and contributions to the company profitability
index.
The determination of the proper relationship as a level of pay is the foundation effective
employee and employer rem satisfied worker will stay longer in the con Worker will stay longer
in the company and develop a working team that tent employees and keep could be beneficial
to both parties.
One way to retain competent en morale high is to plan salary levels so as to establish
uniformity of pay in relation to the job in the company and those in other business
establishments in the community . The function of the payroll in a company is usually the
wage and salary mistration and it is carried out by the Human Resource Department most
important duty of the Human Resource Department is to set wages scales high enough to
attract better employees and contribute to the level of profitability that will sustain continuous
profitable operations. The level of pay must not impair profits, however,

Theories of Wages
Wage theories deal with the aiment of labor employed in competitive enterprises. Wages
represent the payment of one factor of production that is manpower. Profits and capital could
not be attained without the manpower that has to be paid according to their contribution for
the acquisition of enough capital to attain the desired profits Wages are the contributions or
are the shares paid for the value of land, capital and profits
1. Classical Wage Theory
This theory is based upon the fundamental concept that laboris a commodity and we have to
pay the price according to supply and demand . When the labor supply is greater than the
demand, the lower is the price and when there is greater demand the higher is the price. The
price of labor which is called wages, is necessary to keep the laborers to subsist and perpetuate
their race. Wages should not fall below subsistence level. When the supply of labor reaches
below the industrial requirement, there will be a competitive bidding among employers and
therefore there will be a consequent rise in wages. When the price of the labor is below the
natural price, the condition of laborers is most wretched. When this happens the laborers could
be deprived
of those comforts which customs render as absolute necessities.
2 The Just Wage Theory of St. Thomas Aquinas
A just wage is described as wage which permits the recipient worker to live in a manner in
keeping with his position in society. This doctrine is related to social organization based on the
individual in the social organization.
According to this theory, the workers' cost of living should be consideted first in the cost
obrodinction Wages are responsible for allocating Labor to various occupations
This theory is the basis in the implementation minimum waste law While it could not consistent
with the minimum requirements for a decent living in the social organization, it responds to the
basic requirements for subsistence living. The creation of the Tri-partite Board composed of
Labor, Management and the Department of Labor is the answer to the study of the
implementation of just wages.
3. The Wage Fund Theory
The wage fund theory expounded by John Stuart Stuart Mill and his followers is based on the
Malthusian theory of anulation and the law of diminishing returns. This theory holds the idea
that the working capital of the nation provides a fund from which wages can be paid. The
fund is to be divided by all the workers proportionately. When a certain group gets a greater
share of the total fund, the rest in the group will have less to share. An increase in the wages of
some through collective bargaining or any other pressures will adversely affect the wages of
others
Under this theory it would appear that it is futile to attempt to increase wages. It would appear
that when you increase the wages of other workers. in the company it would redound to
decrease the wages of the other sectors because the portion of the corporate ware fund goes
to the selected sectors. in the organization. A comment under this theory is that the fund
should be elastic for all the other factors of production such as capital, maintenance materials
and labor. It should be elastic enough to meet the economic conditions prevailing conditions
prevailing at the time and the conditions of the corporate economy.
4. Bargaining Theory of John Davidson
The bargaining theory proposes that labor is a commodity like anything that could be bought
at a price by the user. As a commodity, carries with it a price that is determined by the
bargaining process between the buyer and seller. The sellers of labor are the workers and the
buyers are the users or the industries that utilize their services. The labor sets the limit of the
value of their services as conditioned by the utility of reward. Such reward is conditioned by
what their money can buy with the wages in the light of their actual standard of living
The bargaining theory brings about the organization of labor unions. These unions bargain
with management for their services. The management then sets the discounted value of labor
based on the value of output in question; while labor demands the living wages that they think
is enough to sustain a decent living condition. When management sets a rigid limit on the funds
available for labor as it affects operating cost and profitability, on the other hand, labor insists
on living wages for their effort. The resultant condition is either a strike or a lockout.
5.The Marginal Productivity Theory
The marginal productivity theory of the best EXPLANATION Thurly of Lahor in any givenThe
supply of labor in any siven economy on the whole depends upon the total number of
individuals
e total number of individuals who want to work and available for Worl Worker
which is the transfer from one company to
which the transfer
portunities in the other many affects the structure of War in the industa. It is not only the
difference in wag
inases that makes the employee transfer to another company. Better opportunities
another company. Better opportunities for advancement, nchis better working environment are
the corporate accepte are other factors that affect mobility in this lucture it may be
surmised that is not dead by the mem ment but the dete ch existing ob differences all for
workermasement
The hiring of added labor force, or the transfer of one employee to another company at a
particular wage is based on the assumption of the company that the added labor will contribute
to the increase in production output or the increase in the quality of the product. While such
assumptions may have bearing curtain extent any increase in manpower tends to decrease the
value of the marginal product as the number of workers increases in our developing economy
where manpower is in great supply against demand, competition in the labor market is seldom
felt by the industry, except in some Critical positions where specialization is in great demand
6. The Purchasing Power Theory
The purchasing power theory tries to establish the relationship between wages and the level
of economic activity. The level of economic growth is dependent upon the savings generated
because the increase in wages creates a surplus that propels growth. The more income the
worker gets the big the purchasing power of the workers; then this increases consumption of
goods and services. Increased consumption of goods generates employment opportunities
7. Labor Theory of Value
Karl Marx, propounds this theory of labor. This gives credence to the value of labar It
emphasizes that labor is the source of all product and that without this important component
there could be no goods for human consumption Every good that is produced could be traced
back to the participation of the worker and, therefore, labor must get the greater share of the
profit. This is the philosophy of some organized labor groups who are more active in the greater
share of the profits of the company operations. These labor unions have the notion that profits
are the surpluses of the other factors of production, and are pocketed by the capitalist
businessman making them amass wealth.
Profits should be shared with labor as they create the goods that generate these surplus
incomes. Economic activity is created by capital, by the surplus profits that create investments.
When employer's contentions run counter to the activists group of labor unions, this can create
labor unrest detrimental to both labor and management and evento economic growth 8. The
8.Standard of Living Theory of Wages
A recent development in labor market is the theory of living wages that means that wages
should be based on the cost of living .The cost of living is dependent upon the economic needs
of the family for the basic necessities of life for food clothing and shelter. While the philosophy
is economically sound for the improvement of the living conditions of the labor force is
counterproductive due to the forces of global economic activity. Our productivity index has to
cope with increased competition in the global market and our products must be paired in
quality and price.
Any increase in economic growth would redound to increased wages. Nevertheless an
increase in income would mean more consumption. More consumption increases the prices of
goods and thus living wages also need to be increased proportionately. There could be no end
to this argument. It is the government, labor and management that must sit together to
determine the level of living wages if possible by industry and by region.

Wage and Salary Surveys

Once the worth of a job has been established using one of the job rating systems. the actual
salary to be paid for each job must be determined. A major factor in making the determination
is the wage survey. Since salaries paid by other companies have an effect on employment,
morale and turnover rate, close attention is paid to the salary that is prevailing in the
community and industry for specific jobs.
Most companies participate in wage and salary surveys or they conduct their own surveys.
Informal Surveys may be conducted through telephones and informal interviews. Formal
salary and wage surveys are questionnaires based on benchmark jobs that are also present in
other companies and industries. In the formal survey method, the Human Resource
Department prepares a set of questionnaires incorporating common jobs present in the
company and is comparable with other jobs in other industries.
Procedure in Conducting Wage and Salary Surveys
Before embarking on a wage and salary survey, the Human Resources Department should study
the wage and salary data that are already available. In any request for survey data, it could be
recognized that job title alone is not good enough for matching! jobs. Each job title should be
accompanied with one paragraph job description so that it is possible to accurately compare
jobs. In addition to the base salary, the information should include data on shift premiums,
overtime payment practices and methods of wage payment. Some surveys also include
questions on paid holidays, vacation policies pension benefits group health cards and life
insurances and additional pays. These data are needed for more analysis of the total pay
structure and its relate to other company benefits
Defining the Labor Market
List of Key Job Positions
Detailed Description of Jobs
Collection of Salary Data
Compilation of Salary Data
Results of Survey

The following are the steps in conducting the survey:

1. Defining the labor market. Establishing the boundaries of the pertinent labor market is the
most critical step in the survey procedure. It involves the selection of the industry, the region or
area or the firm to be included in the survey
2. List of key fobs and positions common to most firms in the survey. This will ensure a
representative sampling of the jobs that will be selected as aniversal for a particular wage or
salary survey
3. A detailed description of the key jobs and positions that are to be included in the survey
and that is common to most firm or industries. Key jobs are 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
4. Collection of accurate wage and salary data. 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 thal has to be addressed by the
compensation level, compensation structure and the terms of payment plan:
5. A compilation of the wage and salary data for each job. The data gathered will provide
management with the opportunity of arriving at the arithmetical average the median and the
range or rate paid and the supplementary wage data
6. Presentation of the results of the survey. The results are properly evaluated and HRD
prepares the corresponding recommendations to the management on the most appropriate
action to take relative to the revision of the current wage structure. Participating companies are
also provided with the summary of thefindings to foster continuous cooperation.
After the organization completes the salary survey and finds out what he prevailing salaries are
in the community for comparable jobs, it must then make several decisions:
1. Whether the company should pay salaries above, below or at the same level asthe 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 which would provide room for merit increases.
3. How many pay grades or salary ranges 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 levels? Although there are no set rules for making these decisions, one tool that is
often used to simplify the process is the use otwedimensional staphs, also known as data
trendiraph. When the graph is used with the point system, the values of the points for key jobs
in the industry are plotted with the lowest pay at the bottom. The survey data for any job is
then plotted according to the evaluation points and grades. Eventually all the pay survey data
should be plotted.
An examination of the graph will indicate the trend of the data plotted. A line is drawn to
indicate this trend, using one of the following techniques:
1. Eye Inspection - The line is drawn freehand so that about the same number of data points
fall above the line. It follows the general trend of the data. This technique is the leasf scientific
and reliable as this does not require scientific computations. It is more of a judgmental analysis
that is used only by experts in the field of job evaluation
2. The Least Squares - This uses the statistical formula; the trend line will normally follow a
straight path. It presents more accurately the relationships between the peso or money value
and the points for the key jobs
3. The Second Degree Curve - Using another statistical formula; the trend line willen maltake
the form of and may more accurately indicate the trend of the data correctly reflect the trend
of the data collected so and will hold throughout the structure the rank rank number or grade
in be substituted for points on. The trend line should correctly rele competitive pay rates and
rang method is used, the tank horizontal of the graph
A similar graph should then be drawn to reflect the relationship between inter 10 rating fint. A
trendline should be established and drai
the side-survey trend line. In this was cholarles con with those outside the company. Then th to
be made whether to pay below the survey trend line, meer itdecision will have to be made
whether top pay above it.
In deciding whether to ma between personnel an line, its ability to compet the same industry,
thereby product.If the company pays above the survey trend ty to compete may be endangered
as the labor cost will be higher than Wustry, thereby added cost of production will be added to
the cost of the the company pays below the trend line, its ability to hire capable employees
rected or this will use personnel turnover. To reconcile these two conflictine management may
decide its own slope line that should be about the same as the result of the survey.
Another important decision is whether hourly paid occupations should be signed a single rate
or a range of rates. For production or maintenance workers, most organization pays one
standard rate for all jobs in the same grade. That is especially true when an operation is so
standardized that it is difficult to determine accurately the contribution of workers A single rate
for each job has the advantage of eliminating favoritism.
The Development of Wage and Salary Structure
The design and operation of wage and salary structure is the concern of management and
employees Wage and salary structure is the hierarchy of jobs to where the pay rate is attached.
The positions are allocated in pay grades according to the job evaluation results and its
relations with the pay system derived from the results of the salary survey. The jobs are ranked
in ascending to descending order according to their importance and based on the points or
ranked earned in the job evaluation program conducted by the HRD and the committee created
for the development of a more responsive pay system.
The following are the advantages of the wage and salary structure:
1. It affects the workers' earning and standard of living.
2. It eases the recruitment and maintenance of an effective labor force.
3. It develops employee morale and increases work efficiency.
4. It represents cost and competitive advantage in the industry.
5. It helps in preparing budgetary allocations and eases computation of salary adjustments and
as an aid in short term and long range plans.
6.It eliminates pay distortions and inequities in employee compensation
7. It establishes an equitable salary range for various job
Wage Structure Design
The design of the wage and salary structure is the establishment of the job classes and rate
ranges. All jobs within a class are treated in the same way for purpose of economical
administration Pay structure ranges should be used in developing schedule for both rank-and-
fileemployees, technical and managerial positions. In some companies, they have a separate
structure for hourly and daily paid employees and separate salary structure for regular monthly
paid jobs. The managerial pay systems are separated, based on rank depending on their
assignments and contributions to the companys' profitability index.
The number of pay ranges in pay structure depends on the company and on the number such
structures in the company. If a company has a single salary structure then, there should be
many pay grades. If the organization has one wage structure for hourly workers, another for
office regular workers and still another for supervisors and managerial employees, then there
should be a moderate number of pay grades in each structure. There is a standard number of
pay grades per structure for any Industry or company. This depends on the number of job
classes and the number of employees in the company. The greater the differences in job classes
the greater the number of pay grades in the salary structure to give credence to differences in
duties responsibilities and other factors of variances as determined by the job evaluation
program.
The same could be said for the width of the salary grade. There is no standard guide as to the
spread of pay grades. For hourly jobs, the spread from the minimum to maximum may vary
from ten percent (10%) to twenty (20%), while for salaried jobs the spread may vary from 15%
to 75%. The typical spread of salaried jobs is 3% from the minimum to the next to step. (See
Sample computation)another
Once the pay structure has been determined the next step is to assign employees to their
proper job classifications. If the jobs are properly evaluated and were developed before the
implementation of any structure most existing salaries should fall within the salary range
established for their jobs. When employees salaries fall below the minimum of the pay grade
for the job, then it is called green circle rate. When that occurs, the decision to bring salaries to
the minimum of the grade should be based on the employees' performance. If the employees
are on training stage, their salaries should perhaps be below the minimum of the grade until
they can fully meet the requirements then they are brought up to at least the minimum of the
pay grade.

SALARY RANGE: It is the range of the salary that is paid to an employee doing similar
functions that has a minimum and maximum pay and a series of step adjustments. It is to
provide adjustment in pay for performance evaluation without distorting the salary pay plan:

Salary Adjustments with High Seniority

Another reverse situation is when the employee with high sen competent or has received so
many increases that his salary is ab the pay grade. This is called red circle rate which can be
handled in two ways:
1. Review the performance of the employee. If the employee is doing superor work and is
capable of performing higher tasks or responsibilities and has displayed potentials for
promotion, then he has to be promoted and given the salary grade corresponding to the new
assignment. He should be under probation in the new assignment for at least 3 months before
he assigned to the new pay grade.
2. If the performance review reveals that the employee is not worthy to be promoted and
such salary increase was discreetly earned for some obvious reasons, then the employee will
not get normal merit increase due to the implementation of the new structure. As the range
moves up due to cost of living index and the salary plan is revised accordingly, then his salary
probably will still fall within the range and then he could be entitled to future adjustments if
deemed necessary.
In order to remain competitive, a salary structure should be reviewed every two or three
years depending on the inflation rate prevailing in the country brought by economic factors or
internal factors such as improved productivity and profitability.

Methods of Wage Payment

The main purpose of a formal wage and salary management plan is to have a Systematic
method of payment to ensure that employees receive a fair wage and salary for the work
they perform. Up to this point, we have examined how these wages are determined or how
much the employees should be paid for the work they perform Now we will examine the
methods of determining how salaries are paid. Two organizations may have similar salary
structures for their jobs, vet may use different methods in computing the employees' salaries.
Salaries may be the same but one company may pay on hourly basis plus piecework There are
two methods of paying salaries:
1. By the Time Worked - earnings do not fluctuate with the amount of work performed or with
the quality of output. In this method, wages are computed in terms of unit of time. It is
common to pay workers by the day and the term day-work was adopted. Dax-work methods of
pay usually include weekly or biweekly or monthly bases Paving by the time worked is called
Non-incentive wage plan because the method of calculations will not immediately resultin more
money. No matter how hard an employee works during an hour, the pay will be computed by
the hourly rate and no more. Wages under this plan are computed by multiplying the number
of hours worked by the rate per hour, as follows:
HXR-W
In which
H R W- Hours actually worked - Rate per hour in pesos - Total wages earned
Payment on the basis of time worked is more satisfactort under the following conidtions:
1 Employees lave
2. There is no clear-cut relationship between the effort made to produe the work and he
amount and work produced.
3. Work delays occur often beyond the employees control
4.Quality of work is very important
5.Units of work produced cannot be distinguish work the
Produced cannot be distinguished and cannot be measures
2.By the Amount of Work Produced-eaming depends on how much work or on a related
factors as the quality of work. The Was is called on interne he most common called pieces
employee completes or on are method of paying wages is of incentive plan is called the number
of pieces produe De value that is called piece rate, amese pleces an employee applicat
acceptable quality of work perform and he is tasked to develop methods of performan changing
materials and equipment so that better
piece rate, me study sets the acceptable number CD R e given time taking into casino on the I
work performance. An industrial engineer studies jobs evelop methods of performance revising
the flow of work and equipment so that better work systems are developed
There are times that rates are based on past expe guesswork. The formula for computing
salanes
at rates are based on past experiences on similar jobs or on formula for computine salaries
under piecework is as follows:
N.XU-W
In which N = Number of units produced
U - Rate per unit in pesos
W - Wages earned per day or per week Guaranteed piecework curs when emplovees are paid
their days - Work when the work distortion is not caused by the employees' lack of power or
some other factors beyond the control of the workers.
Payment by piecework is satisfactory under the following conditions:
1. When a unit of completed work can be measured easily;
2. When there is a clear relationship between a workers' effort and the results of
his efforts;
3. When the quality of work is less important than quantity or when quality
standards are uniform and measurable;
4 When the flow of work is regular, breakdowns are few and jobs follow a standard procedure,
with few interruptions.
Wage and Salary Policies
The company or any organization must have a clear-cut wage and salary policy These policy
guidelines will help the organization have better relationships with employees and develop a
more comprehensive employee financial planning program The wage and salary must appeal to
all employees and stimulate them to greater efforts
These characteristics include the following:
1. The wage and salary plan must be easily understood. Every worker wants to know how his
company wage plan works. To keep employees in the dark as to how their earnings are
determined could lead to distrust on the management and fear that they are not getting paid
for what they have earned.
2. Salaries in the wage plan should be easily computed. Most employees like to compute from
to time what they are earning and to make sure that the salaries are correct. Therefore, a wage
payment plan should be simple enough to allow quick calculations. The method of wage
payment must be explained during the orientation program and emplovees must be made to
understand that wages are related to employees' effort and productivity and based on a wage
plan that relates to duties and responsibilities of the positions and other factors considered in
the job evaluation program.
3. Salaries must be made relevant with efforts. Standards should be set and can be reached by
good workers. Standards should be set so as to challenge a worker making him reach the extra
effort. Once he has achieved the standard, he should be rewarded for his effort with increased
earnings.
4. Incentive wage plans should provide payment for incentive earnings to employees soon
after they have been earned for efforts exerted to reach the standards. In this way, the reward
or penalty is fixed in their minds in relation to the work they do. Obviously, it would be too
costly and unwieldy to prepare a payroll every day. A weekly payment of wages is most
reasonable.
5. The method of payment should be stable and unvarying. Frequent changes in
wage payment plan may lead worker to think that management is trying to confuse and or even
cheat them. It is important to choose a plan that will fit the needs of the organization so that
the necessity of frequent subsequent changes eliminated.
Morale Renewal in the Workplace
1. Know that leaders have limitations.
Steve Berglas of the Harvard Medical School believes that people who achieve great heights but
lack the bedrock character to sustain them through the stress are headed for disaster.
He predicts that one or more of the four could result when a leader does not have the requisite
character arrogance, aloneness, adventure-seeking of adultery.
2. Choose character.
John C. Maxwell it in his observation that, "We have no control ove lot of things in life. We
don't to choose our parents. We don't select the location or cincumstances of our birth and
upbringing. We don't get to pick our alents and IQ. But we do choose our character. In fact, we
create it every time we make choices."
In the workplace you can create your own character. Do you want easy money or work for it?
Do you keep the right company? Do you stand by your principles? You can, if you choose to
3 Walk the talk.
Integrity is important in the workplace. In fact, many employers prefer to have employees with
integrity first, then skills second, Skills can be taught but integrity is innate in ones' character.
4. Avoid compromising
While life is not black or white but shades of gray, there are instances when you have to
choose between right or wrong. A wrong can never be right even if a compromise is reached.
If workers really want straight leaders, they must be vigilant and uncompromising in asserting
their rights as well as in performing their responsibilities. When compromises are made, the
rest of the organization, the buying public and the society are affected.
5. Use the same measures on yourself.
You want a leader who is not immoral. corrupt or incompetent. Exact the same measure or
standards on yourself. Be as harsh on yourself as you are in judging others. That you are just a
follower is never an excuse for being lazy, incompetent or immoral.
6. Face the mirror.
If you want one less scalawag in the workplace, reform yourself. Look for areas for
improvement in your character. If you have the guts, ask somebody you trust to tell you what is
wrong in your character. Take the feedback positively as a gift for your improvement. Don't
rationalize but instead work at developing a better you.
7. Show the mirror to your leaders.
If you want honest and concerned leaders, you might just have to show them the mirror too.
Some of them might have blind spots and can't see their mistakes, shortcoming and
transgressions.
Remember that tyrants happen only when the bed blindly accept tyranny or do not do
anything about it to make leaders honest they must know that they are also being watched
and evaluated and that positions and possessions are only temporal and ephemeral
8.Don't just admit mistakes correct them.
People who do not know that they are wron cannot be corrected. The first step towards any
form of renewal is admission that there is a need for correction
Humility to admit mistakes is creat but not enough There must be correction. Even the Bible
mains t ecked after many rebukes will suddenly be destroyed - without remedy.
9. Have an improvement plan.
Do not leave matter of improving yourself. Moral renewal does not happen by accident. You
must exert deliberate effort to mend the crack in your character
Task yourself to show improvement. Have reasonable milestones that you must monitor and
check regularly, then celebrate your little victories. But do not boast about your achievement if
humility is a virtue you are trying to instill in yourself
10. Rebuild and do not slide back.
Set your mind toward the future. Stop going back to your past, except to see how much you
have progressed. Let your guideposts be milestones in the future and not how you were before.
If you have improved in a facet of your character, make sure that you don't slide back. Be not
like the dog that eats his own vomit.
Never underestimate what ordinary people can do, especially when they heed the call of one
leader who was killed in Dallas, almost our decades ago,"...ask not what your country can do for
you, ask what you can do to your country.

Other Information Related to Wages

Labor and Wages
The type of job one does and the financial compensation he or she receives are very important
in our society. Job type is linked to status as is wealth. While the type of job one performs is
arguably more important status wise then wealth, both are important to Americans.
In the past we used to use other descriptions to classify workers. The terms blue collar or white
collar employees were used to describe the type of vocation.
Blue Collar - Manual laborer
White Collar-Omee workers
Pink Collar-fob associated with women like nursing secretarial etc
This being a rather sexist term, is no longer used. our work roles into three categories called
labor grades. The labor grades are described below:
Skilled Lahor-these are workers who have received specialized training to do their job. They
have developed and honed a special skill and may or may not need to be licensed or certified by
the state. The examples of skilled laboren are s artisans, carpenters plumbers, electricians,
business executives and manager white collar accountants, engineers, police, mechanics, etc.
These may be blue or w worken,
UNskilled Labor - These are workers who have received no specialized training and have few
specific skills. As our society has grown into an incre into an increasingly technological one, the
members of this group have developed more and A mechanic, for example, used to be
considered unskilled labor. Today day that is no longer the case. Mechanics require a great deal
of skill and training to work with today's modern engines. Examples of unskilled laborer are
constructionworkers, sanitation and custodial workers, painters, factory assembly line w These
are blue collar workers. painters, factory assembly line workers, etc. those workers
Professionals- Arguably the elite of the labor grades, these are those work who need an
advanced degree to do their jobs. The three primary groups of professionals are doctors,
lawyers and teachers. These are white collar workers.
These labor grades are often said to be non-competing labor grades because workers rarely
move from one grade to another and do not compete salary wise with each other. There are
reasons why they do not compete with each other. The cost of education and training may be a
significant obstacle. They might lack the opportunity to make such a move and they might also
have a lack of initiative.

Factors Affecting Wage and Salary Administration

1. Demand and Supply: Demand for and supply of labor and its availability will have
great influence on
the determination of wage rates. If there is a shortage of labor, the wages demanded
will be high. If onthe other hand labor is plentiful, workers will be too willing to work at
low rates of wages.
2. Organization's Ability to Pay: This is a major factor affecting the determination of
wage and salary
structure of an organization Financial position and soundness of an organization can put
it in a position to offer attractive compensation package
3. Prevailing Market Rate or "Going Wage Rate": This is practically the major factor
that induces any organization to take it as a base while determining wage and salary
structure for il Prevailing market rate is also known as most comparable rate of wage
and most popular method for wage rate determin ation, especially for lower cadre
positions
4. Productivity: Productivity is measured in terms of output per man hour/
5. Cost of Living: It is always expected that there has to be adjustment in pay rates
prevailing cost of living
6.Trade Union's Bargaining Power: Generally the mechanism for fixing of wages for
majority of workers is collective bargaining or negotiation, and collective bargaining and
negotiations depends upon the trade unions strength
7. Job Requirements: From the organizational perspective appropriate job analysis and
job evaluation exercise is a base for the wage determination and revision.
8. Management Attitude: Attitude of employer or management towers the working
community of the organization does influence in wage determination and revision at an
appropriate time.
9. Paychological and Social Factors: Psychologically person perceives wages and
compensationpackage as sole parameter for success or failure in the life
10. Legislative Considerations : Legislative provisions de provide protection to the
working community by fixing bottom line for wage payments Morale Renewal in the
Workplace
1. Know that leaders have limitations New chand meeting
2. Choose Character
3. Walk the talk