Wage and Salary

Administration
 Student Learning Outcomes

• Demonstrate the understanding of the basics of wage and salary

administration in the business setting

• Identify and analyze the key issues related to wage and salary
administration in a business setting

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 Evaluation

Sr. No. Component Weightage (%)

1 Announced Quiz 30
2 Group Project 30
3 End Term Exam 40
4 Total 100

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 Evaluation

• Three quizzes would be conducted – Best two scores would be taken for
computation of the grades – online quizzes - mcq

• All the quizzes would be announced.

• The dates for submissions and quizzes are sacrosanct – non negotiable.

• Please form groups of 6. The details of group project would be communicated

shortly

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 WASA – Expected decorum

• Class Decorum
• Avoid usage of phones/tablets/laptops

• Digital gazing will invite penalty

• Institute norms for attendance to be followed

• Maintain punctuality

• Examination Decorum
• Any type of plagiarism/copying/misconduct during examination would be dealt as per
institute norms

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 Additionally

• Please be ready for extra classes

• Please inform a-priori in case of planned absences, specially

placement or other institutional activities

• Although no marks for attendance – students found short of

attendance as per institute norms would be penalized as per institute
norms

• Any change to evaluation pattern would be communicated

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 Pedagogy

• Mix of classroom based discussions and examples

• Some fictitious cases and examples

• Please collect the recommended text – Milkovich from the library

• Discussions would rely and build on the earlier courses and related fields and
hence it is expected that students are thorough with those concepts

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Session Objectives

• Try and understand what is wage

• Try and understand difference/similarity between wage and salary

• A typical pay slip and its constituents

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Work

• What is work?

• Paid work = employment

• Three dimensions of employment

• Master
• Servant
• Some exchange  Mostly monetary in nature

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So

• Homo-economicus – Rationality assumption

• Maximize the gain

• Diverse interests: for employer and employee and hence need to align the
interests

• ‘Ceterus paribus’  dynamic in nature

• The invisible hand of the market and its role

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Points to note

• Power asymmetry between employee and employer

• Labour is not a commodity

• Wages and effort employee surrenders autonomy employer directs the

employee

• A lot of fields provide the theoretical foundations  Economics, Law, OB,

Strategy

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What is Wage

• Dictionary meaning  a fixed payment earned for work or services  temporal

aspect (daily, weekly, monthly etc.)

• Wage come across legislations such as minimum wage, employee compensations

act, payment of bonus act etc.

• The concepts of minimum wage, fair wage and living wage

• Wage is some sort of exchange for work or services offered: preferably in the
current currency of denomination

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What is salary

• Fixed payment  usually expressed as an annual sum

• Temporal aspect

• Latin origins  ‘sal’ – salt – allowance given to Roman soldiers to buy salt

• Current currency as well as any other prevalent or accepted form

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Putting together

Wage Salary
• Fixed payment • Fixed payment

• Work done/services offered • Work done/services offered

• Hourly, daily, weekly, monthly project • Usually monthly, but expressed as an

based annual sum
Both wage and salary represent one and the same  some more synonyms
include pay, reward, compensation  paradoxical to call it compensation and
reward at the same time
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 Typical pay-slip – micro level

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 Wage bill at macro level

• At organizational level the wage bill reflected and measured as a

number of rubrics
• Labour cost – comparison at industry level

• The wage bill forms an important part of the balance sheet and the cash flow
statements and the associated notes to the accounts

• Wage bill also important from view point of the executive compensation.
Companies mandated to disclose the names of 10 top paid employees and
those earning > 1.02 crores per annum (Earlier limit 60 lakhs)

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Another way to look at - pay

Total Returns

Total Relational
compensation Returns
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Another way to look at - pay

Psychological

Relational
Returns

Recognition Employment Learning Challenging

& Status Secutiry opportunities work

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Another way to look at - pay

Transactional Total
Compensation

Cash
Benefits
Compensation
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Another way to look at - pay

Transactional Total
Compensation

Cash
Benefits
Compensation
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Another way to look at - pay

Transactional
Cash
Compensation

Short term Long term

Base Pay Cost of living
incentives incentives

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Another way to look at - pay

Transactional
Benefits

Income Work Life

Allowances
Protection Balance
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Pay Model Objectives

Efficiency

Objective

Compliance Fairness

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 Summarizing the thoughts

• Paid work vis-à-vis employment

• There is some sort of exchange between the master and servant (employer and
employee)  this exchange usually is in monetary terms  referred to as wage

• In purely legal terms there is no such thing as salary  all relevant legislations
use the term ‘wage’

• Typical pay slip has both accruals and deductions with certain sub headings such
as basic, da, etc.  Scope of our discussions would not include the legal aspects

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