Page 132 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Managing Human Element at Work

Notes cooperative with management and productivity is up. Although, there is both monetary and
non-monetary forms of compensation, it is the monetary form of compensation which is the
most basic element by which individuals are attracted to an organization and are persuaded
to remain there.
Wages in the broad sense mean any economic compensation paid by the employer through
some contract to his workers for the services rendered by them. The Payment of Act 1936,
sec 2(vi) defines wages as, “any award of settlement and production bonus, if paid, constitutes
wages.”

6.2.1 Wage Structure
Jobs offered by an organization vary in terms of their value. Value is assigned in job
evaluation and the value of each job is compared in relation to other jobs in an organization.
How an organization structures its base salary programme depends on the philosophy and
marketplace practices. In structuring its wage and salary organization make use of several
options that are available:

1. An organization can use a single rate structure in which all employees performing the
same work receive the same pay rate.
2. An organization can use a tenure-based approach that focuses on the length of services.

3. An organization can use a combination of tenure-based plan and a merit-based plan.
4. An individual can be paid only on the basis of performance. For example, commission
of sales.

5. An organization can form a base pay with an incentive opportunity based on individual,
team unit or company performance. This method is quite popular in the modern day
organizations.

6. Organizations may combine elements of all the above mentioned approaches and
create their own formal programme.

6.2.2 Determining a Wage Structure
Once all jobs are assigned values, then these are placed in a grade. The grades are arranged
in a hierarchical order starting with lower to higher jobs. A wage and salary structure
consists of various salary grades as given in the example below:
Foreman: 10000-500-15000-600-18000
Senior Operator: 8000-400-12000

Operator: 7000-350-9100
While designing a salary structure, the following outline has to be borne in mind:
1. Ascertain and establish the market rate survey and the studies on the existing salary
structure from the senior to the junior grade.
2. Draw up a salary grade structure ranging from the lowest limit to the highest limit
along with the salary gaps between jobs.

3. Make a job evaluation and rank the jobs into a hierarchy.
4. Procure market data to establish external equity in the pay scales.
5. Based on the result of the job evaluation and market rate survey or studies arrange
all jobs in the grades in a hierarchical order.
6. While constructing a salary structure two points have to be borne in mind:

126 LOVELY PROFESSIONAL UNIVERSITY