Employee Remuneration

“it is the compensation an

employee receive in return of
his or her contribution to the
organisation”
 components
• Wages and salaries
• Incentives
• Fringe benefits
• Perquisites
• Non monetery benefits
 Importance
• Severals problems relating to personnel
centred around remuneration.
• It enable to attract ,retain the competent
pepole
• It has been motivating to perform better.
• Main objective of wage policy in any country
should be the promotion of economic
development
 Methods of Remuneration

• Time wage system

• Piece wage system

• Incentive wage sysytem

 Time wage system
• The wages under this method are paid on the
basis of time devoted to the enterprise rather
than the number of goods produced .The basis
for payment of wages may be daily, weekly or
monthly
• The employer pays for the time of employee
which is bought by him.
 Example
• Suppose an employee is given Rs 10 per day his
wages for 25 days will be
T*R= E
where ,
T= time worked
R= rate per hour
E= workers earning

Rs 10 *25days= RS 250
 Advantages
• Security
• Simple
• Quality of goods
• Proper handling of machines and materials
• Only method suitable in assembly line
 Disadvantages
• Absence of incentives
• Wastage of time
• Difficulty in calculating labour
cost
 Suitability
• Where Supervision is strict
• If quality produced is of prime
importance
• If interruption in work is frequent
and beyond the control of workers
• Where productivity of employee
cannot be easily measured
 Piece wage system
• Workers are paid their wages
according to amount of work done
rather than time spent
• Formula
Wages= units produced *rate per
unit
 Example

• Suppose rate per piece is Rs 10 and A

produces 100 units in a day
then wage of A will be,
Rs 10* 100 units =Rs 1000
 Advantages
• Increase in production
• Estimation of labour cost
• Decrease in cost per unit
• Efficient and inefficient categorisation
• Less supervision required
• Improvement in working methods
 Disadvantages
• Low wages of beginners
• Poor quality
• No security of wages
• Mishandling of machines
• Opposed by unions
• Deterioration of health
 Suitability
• Where units of output are measureable
• The job is standardised , the flow of work is
regular and breakdown are few
• Quality consideration are less important than
quantity
• Supervisors cannot devote enough attention
to individual performance
 Incentive wage system
This wage system increase productivity by
inducing employees to work hard. The
employee is rewarded for producing more
under incentive plans
 Essentials of Incentive Plans
• For each job, basic rate must be established, it
is the minimum wage which each worker
should get
• Wage incentive system should be simple to
understand, if it is the complicated its utility
• It must be discussed with workers and
supervisors before it is installed. No incentive
plan can be successful.
 Essentials of incentive plans
• The methods of doing the job should be
standardised through motion studies and
work simplification techniques