what is Remuneration???

Remuneration is the

compensation an employee
receives in return for his or her contribution to the organization

Remuneration occupies an

important place in the life of an

employee

Employee remuneration
Employee Remuneration refers to the reward or compensation given to the employees for their work

performances.
provides basic attraction to an employee to perform job efficiently and effectively

Why is it important???
Leads to employee motivation Affects employee productivity Affects work performance

Monetary benefits
Wages and Salary
Wages refer to the hourly rates of pay, salary refers to the monthly rate of pay, wages and salaries are subject to annual increments.

 Incentives

Incentives: also called payment by result paid in addition to wages and salaries. depends upon productivity, sales profit 1. individual incentives scheme 2. group incentives scheme

Fringe benefits

These include such employee benefits as provident

fund, gratuity, medical care, hospitalization,

accident relief, health insurance, canteen, uniform and like

Perquisites

These are allowed to executives and include

company car, club membership, paid holidays,

furnished house.

Non monetary benefits

Challenging job responsibilities Recognition of merit Growth prospects

Comfortable working conditions

Competent supervision

Factors influencing employee remuneration

External Factors

Internal Factors

External factors
Labor market

Cost of living
Labor union Government legislations The society The economy

Labor market
Demand for and supply of labor influence wage and salary fixation. A low wage may be fixed when the supply of labor exceeds the demand for it.

A higher wage will have to be paid when demand

exceeds supply, as in the case of skilled labor.

Cost of living

A rise in the cost of living is sought to be

compensated by payment of dearness

allowance, basic pay to remain undisturbed.

Many companies include an escalatory clause in their wage agreement in terms

of which dearness allowance increases

or decreases depending upon the movement of consumer price index

(CPI)

Labor Unions
The presence or absence of labor organizations

often determines the quantum of wages paid to

employees. Employers of non-unionized factories enjoy the freedom to fix wages and salaries as they please. Because of large unemployment

The society

Remuneration paid to employees is reflected in the

prices fixed by an organization for its goods and

services

The economy

Example: a depressed economy increases labor

supply and in turn lowers the going wage rate.

Labor unions, the society and the government are less likely to press for pay increase during a depressed economy

Internal factors
Business strategy

Job evaluation and performance appraisal

The employee

Business strategy

Rapid growth-remuneration is higher than

what competitors pay

If strategy is to maintain and protect current

earnings remuneration level is average or

even below average.

Job evaluation and performance appraisal

Job evaluation helps in setting up wage differentials among jobs

Performance appraisal helps award pay increases

to employees who show improved performance

The employee

Performance: Rewarding performance motivates

the employee to do better

Seniority : as the most objective criterion for pay increase

Experience :makes an employee gain valuable insights and should therefore be rewarded.

Skill based pay

In skill based pay system an employee is paid on

the basis of number of jobs he or she is capable of

doing or the depth of his or her knowledge. In the traditional system pay is on the basis of job held

Pay secrecy
Tendency among firms is to maintain pay secrecy

to avoid pay comparisons among employees

Firms in public sector disclose full information Family-controlled organizations tend to maintain pay secrecy.

Comparable worth
Equal pay for equal work If two jobs receive the same number of points in a point-ranking method of job evaluation they have to be paid the same subject to their seniority and merit differences.