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Human Resource
Management
Wage and Salary
Administration
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OBJECTIVES ♡‿♡

AFTER THIS LESSON, YOU SHOULD BE ABLE TO:

• Enumerate the different theories of wages
• Explain the significance of wages to the
worker, labor and labor relations to the
national economy and to society;
• Discuss the procedures of a wages and salary
survey
• Compare the advantages of the wages and
salary structures
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WAGE INCREASED
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PIECEWORK METHOD
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WHITE COLLAR WORKER
PURCHASING POWER
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BLUE COLLAR WORKER
SALARY SURVEY
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SALARY STRUCTURE
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BARGAINING
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SKILLED LABOR
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PROFESSIONALS
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Wage and Salary

Administration
 ) ) ) ) ) ) ) ) ) THE ROLES OF HUMAN RESOURCE
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IN THE PAYMENT OF
SALARIES

• One of the most important functions of the Human

Resources is the payment of the proper salaries and wages to
all company employees. The pay that the employees receive
from their employer is very reason for their being in their job.

• The function of the payroll in a company is usually the wage

and salary administration and it is carried out by the Human
Resource Department.
 ) ) ) ) ) ) ) ) ) THEORIES OF WAGES
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Wage theories deal with payment of labor employed in competitive

enterprises.
Classical Wage Theory The Wage Fund Theory
This theory is based upon the This theory is expounded by John
fundamental concept that labor is Stuart Mill and his followers is
a commodity and we have to pay based on the Malthusian theory of
the price according to supply and population and the law of
demand. diminishing returns.

The Just Wage Theory

of St. Thomas Aquinas Bargaining Theory of John Davidson
A just wage is described as wage The bargaining theory proposes
which permits the recipients that labor is a commodity like
worker to live in a manner in anything that could be bought at a
keeping with his position in price by the user.
society.
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THEORIES OF WAGES

The Marginal Productivity Theory Labor Theory of Value

The marginal productivity theory Karl Marx propounds this theory of
offers the best explanation of the labor. This gives credence to the
wages in modern industry. value of labor.

The Marginal Productivity The Standard of Living

Theory Theory of Wages
The purchasing power theory tire
to establish the relationship A recent development in labor
between wages and the level of market is the theory of living
economic activity. wages that means that wages
should be based on the cost of
living.
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WAGE AND SALARY SURVEYS
• Once the worth of a job has been established using one of the job rating systems,
the actual salary to be paid for each job must be determined. a major factor in
making the determination is the wage survey.

Procedure in Conducting Wage and Salary Surveys

• Before embarking on a wage and salary survey, the Human Resource Department
should study the wage and salary data that are already available

The following are the steps in conducting survey:

• Defining the labor market.
• List of jobs and positions common to most firms in the survey.
• A detailed description of the key jobs and positions that are to be included in the
survey and that is common to most firm or industries.
• Collection of accurate wage and salary data.
• A compilation of the wage and salary data for each job.
• Presentation of the results of the survey.
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WAGE AND SALARY SURVEYS
After the organization completes the salary survey and finds out what the
prevailing salaries are in the community for comparable jobs, it must then
make several
• Whether decisions:
the company should pay salaries above, below or at the same level, as
the others in the same industry in the community are paying for the same jobs.
• Whether the company should pay a single rate for or the jobs into ranges or
grades which would provide room for merit increases.
• How many pay grades or salary ranges to use, and how wide each pay grade
should be (from the mirtimum of the grade to the maximum).
• What is the range of amount in terms of money value that should be allotted for
each salary grade levels?
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WAGE AND SALARY SURVEYS
• Although there are no set rules for making these decisions, one tool that is often
used to simplify the process is the use of two-dimensional graphs, also known as
data trend graph.
An examination of the graph will indicate the trend of the data plotted. A line
is drawn to indicate this trend, using one of the following techniques:
• Eye Inspection
• The Least Squares
• The Second Degree Curve

• The trend line should correctly reflect the trend of the data collected so that
competitive pay rates and ranges will hold throughout the structure.
• In deciding whether to match a survey trend line, management faces a conflict
between personnel and economic forces.
 ) ) ) ) ) ) ) ) ) THE DEVELOPMENT OF WAGE AND SALARY STRUCTURE
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The design and operation of wage and salary structure is the concern of management
and employees. Wage and salary structure is the hierarchy of jobs to where the pay
rate is attached. The positions are allocated in pay grades according to the job
evaluation results and its relations with the pay system derived from the allocated in
pay grades according results of the salary survey.

THE FOLLOWING ARE THE ADVANTAGES OF THE WAGE AND SALARY STRUCTURE:
1. It affects the workers' earning and standard of living.
2. It eases the recruitment and maintenance of an effective labor force
3. It develops employee morale and increases work efficiency.
4. It represents cost and competitive advantage in the industry.
5. It helps in preparing budgetary allocations and eases computation of salary
adjustments and as an aid in short term and long range plans.
6. It eliminated pay distortions and inequities in employee compensation.
7. It establishes an adequate salary range for various jobs.
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WAGE STRUCTURE DESIGN

The design of the wage and salary structure is the establishment of the job
classes and rate ranges. All jobs within a class are treated in the same way for
purpose of economical administration. Pay structure should be used in
developing a schedule for both rank-and-file employees, technical and
managerial positions.
The number of pay ranges in pay structure depends on the company and on the
number such structures in the company. If a company has a single salary
structure then, there should be many pay grades. If the organization has one
wage structure for hourly workers, another for officer regular workers and still
another for supervisors and managerial employees, then there should be a
moderate number of pay grades in each structure.
 ) ) ) ) ) ) ) ) ) SALARY GRADE
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• It is the range of the salary that is pad to an employee doing similar

functions that has a minimum and maximum pay and a series of step
adjustments. It is to provide adjustment in pay for performance
evaluation without distorting the salary pay plan.

Sample of Wage Plan for Small and Medium Enterprises

Wage Rate for Daily Paid Employees

SEE DBM CIRCULAR - NBC NO. 579 AS

JANUARY 24, 2020

Implementation of the First Tranche of the Modified Salary Schedule

for Civilian Personnel in the National Government Pursuant to
Republic Act No. 11466
 ) ) ) ) ) ) ) ) ) SALARY ADJUSTMENTS WITH HIGH SENIORITY
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01
Review the performance of the
employee.

02 If the performance reveals that the employee is not worthy

to be promoted and such salary increase was discreetly
earned for some obvious reasons, then the employee will
not get normal merit increase due to the implementation of
the new structure.
 ) ) ) ) ) ) ) ) ) METHODS OF WAGE PAYMENT
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• THE MAIN PURPOSE OF A FORMAL WAGE AND SALARY MANAGEMENT PLAN IS TO
HAVE A SYSTEMATIC METHOD OF PAYMENT TO ENSURE THE EMPLOYEES RECEIVE A
FAIR WAGE AND SALARY FOR THE WORK THEY PERFORM.

TWO METHODS OF PAYING SALARIES:

1. By the Time Worked - earnings do not fluctuate with the amount of work
performed or with the quality of output.
• Wages under this plan are computed by multiplying the number of hours worked by
the rate per hour, as follows:

In which:
H×R=W H = Hours actually worked
R = Rate per hour in pesos
W = Total wages earned
Payment on the basis of time worked is more satisfactory under the following
•conditions:
Employees have little or no control over how much work they produce.
• There is no clear-cut relationship between the effort made to produce the work and
the amount of work produced.
 ) ) ) ) ) ) ) ) ) • Work delays occur often and beyond the employee's control.
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• Quality of work is very important.
• Units of work produced cannot be distinguished and cannot be measured.

2. By the Amount of Work Produced - earnings depends on how much work the
employee competes or on a related factor, such as the quality of work.

In which:
H×R=W N = Number of units produced
U = Rate per unit in pesos
W= Wage earned per day or per week

Payment by piecework is satisfactory under the following conditions:

• When a unit of completed work can be measured easily;
• When there is a clear relationship between a worker's effort and the results of his
efforts;
• When the quality of work is less important than quantity or when quality standards
are uniform and measurable;
• When the flow of work is regular, breakdowns are few and jobs follows standard
procedure with few interruptions.
 ) ) ) ) ) ) ) ) ) WAGE AND SALARY POLICIES
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These characteristics include the following:

• These characteristics include the following:

• The wage and salary plan must be easily understood.
• Salaries in the wage plan should be easily computed.
• Salaries must be made with efforts.
• Incentive wage plans should provide payment for incentive
earnings to employees soon after they have been earned for
efforts exerted to reach the standards.
• The method of payment should be stable and unvarying.
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MORALE RENEWAL IN THE WORKPLACE

1. Know that leaders 6. Face the mirror.

have limitations. 7. Show the mirror to
2. Choose character. your leaders.
3. Walk the talk. 8. Don't just admit
4. Avoid comprising. mistakes correct them.
5. Use the same 9. Have an
measures on yourself. improvement plan.
10. Rebuild and do not
slide back.
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LABOR AND WAGES
The type of job one does and the financial compensation he or she received are very
important in our society. Job type is linked to status as is wealth. While the type of job
one performs is arguably more important status wise then wealth, both are important
to •Americans.
Blue Collar-Manual Laborer
• White Collar-Officer workers
• Pink Collar - Job associated with women like nursing,
secretarial, etc. This being a rather sexist term, is no
longer used.
Today we classify our work roles in to three categories called labor grades.
These labor grades are described below:
• Skilled Labor - these are workers who have received specialized training to do
their jobs.
• Unskilled Labor - These are workers who have received no specialized training
and have few specific skills.
• Professionals - Arguably the elite of the labor grades, these are those workers
who need advanced degree to do their jobs.
 THANK
YOU!
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