CHALLENGES AFFECTING REMUNERATION

CHALLENGES AFFECTING REMUNERATION

People who administer wage and salary face challenges which often necessitate adjustments to a remuneration plan.
The more important of the challenges are skills-based pay, salary reviews, pay secrecy, comparable worth, and international pay.

Skill-based pay: In the traditional job-based pay, employees are paid on the bases of jobs the do. In the skill-based system, workers are paid on the basis of number of jobs they are capable of doing, or on the depth of their knowledge.

The purpose of this system is to motivate employees to acquire additional skills so that they become more useful to the organisation.

Skill-based pay systems work well when the following conditions exist:

1. A supportive HRM philosophy underpins all employment activities.
Such a philosophy is characterized by mutual trust and the conviction that employees have the ability and motivation to perform well.

2. Other programmes such as profit sharing, participated management, empowerment, and job enrichment complement the skill-based pay system.

3. Technology and organizational structure change frequently,

4. There are opportunities to learn new skills.

5. Employee turnover is relatively high.

6. Workers value teamwork and opportunity to participate.

Pay Reviews: Pay once determined, should not remain constant. It must be reviewed and changed often, but how often becomes a relevant question. Pay reviews may be made on predetermined dales, anniversary dates or there could be flexible reviews. In the fixed-date reviews, wages and salaries of all employees are reviewed and raised on a specified date each year- In the anniversary-date reviews, salaries may be reviewed at twelve-month intervals from the date of the employee's anniversary date of hire. Using variable timing ensures flexibility.

In addition, high-performing employees, who are low on their salary ranges, can be rewarded more frequently.

In organized industrial establishments, pay reviews take place once in three years. In government departments, pay revisions take place once in ten or fifteen years. Revisions will depend on the recommendations of the Pay Commission.

Pay Secrecy: confidential Equity in remuneration is a significant factor in employee performance. Perceived inequity in wages and salaries will de-motivate and demoralize employees which will lower employee performance. One way of avoiding this problem is for managements to maintain pay secrecy. This is particularly true in family-controlled and non-unionized organisations, where objective and defensible pay structures do not exist.

Comparable Worth: One of the popular principles in employee remuneration is equal pay for equal work. Beyond the concept of equal wages for equal work, is the idea of comparable worth which implies that if both a nurse and an electrical receive the same number of points under a point-ranking method of job evaluation, they have to be paid the same. subject, of course, to seniority and merit differences.

Any bias in the job-evaluation process is sure to render a comparable worth unworkable. Bias is bound to occur in job evaluations because of the tendency to assign higher number of points for jobs traditionally held by women.
Employee Participation – Involving employees in designing remuneration plan . This will help in little resistance