Wage payment system

1. Wage Payment System

2. What is wage payment system It is the way of giving financial compensation to the workers for the time and effort invested by them in converting materials into finished products . This method adopted by manufacturing industry to remunerate workers.

3. Importance Facilitates the preparation of wage plan for future. Determine the cost of production and the profitability. Determines the earning their living standards. Affects the interest and attitude of the workers and the rate of labor turnover. Helps in recruiting skilled, experienced and trained workers. Helps to increase the productivity and goodwill.

4. Characteristics Fair and justifiable to both. Help in maximizing workers' satisfaction and minimizing labor turnover. Assure minimum guaranteed wages to all workers. Provide more wages to efficient and skilled workers. Follow government policy and trade union's norms. Simple and understandable to all the workers. Help in improving performance and productivity of the workers. Flexible enough to suit the needs of the organization .

5. systems

6. Time Rate System Laborers get wage on the basis of time which is utilized in organization. This wages may be charged on per hour, per day, per month or per year basis. It is also called as day wages system or time wok system.

7. Advantage Workers can easily compute their own remuneration. Earnings are regular and fixed and do not suffer from temporary loss of efficiency . No pressure, the quality of work can be kept high. Learners can concentrate on learning the best methods of work.

8. Disadvantage No incentive for better performance as reward is not proportionate to effort. Guaranteed remuneration makes workers indifferent and complacent. Calculation of labor cost per unit is difficult Control over labor cost becomes difficult and more payment may be made for the lesser amount of work.

9. Suitability Units of output are non-measurable an ( office work and mental work) Quality of work is important, ( artistic furniture, fine jewelry , etc .) Workers are new and learning the job Collective efforts of a group of persons are essential for completing the job.

10. Piece Rate System Laborers can get the wages on the basis of their work done. No time element will be used for calculation of wages. Under this, method, laborer tries to best for producing the products fastly for getting more wages. This method is also called payment by result.

11. Advantage Direct relation between effort and reward Ambitious and efficient workers are provided ample opportunity to utilize their talent and increase their earnings Management can distinguish between efficient and inefficient workers. Increase in productivity results in higher output and lower costs of production per unit. workers themselves have a stake in maximization of efficiency, cost of supervision is low.

12. Disadvantage Difficult to fix piece wage rates. Earnings of workers are not stable and they may suffer temporary delays or difficulties. This system may create jealousy between efficient and inefficient workers. Clerical work is increased. The method is not practicable when contribution of individual workers cannot be calculated, i.e., construction work.

13. Suitability Work can be measured accurately, e.g., production of standardized goods in the factory. When the quantity of output depends directly upon the skill and efforts of the worker. Repetitive jobs . Quality and workmanship are not very important .

14. Work study work study is a systematic examination of activities in order to improve the effective use of human and other material resource. Three Assumptions  There is always more than one method to do a task or a job. Solving problem through scientific methods is better than other method and the Work can be measured in time unit.

15. Advantages Method Study Improved working processes and standardized procedures. Create better work place layout and working conditions. Reduce fatigue to the operators.   Produce better product quality. Bring out the effective used of men, materials and machinery. Work Measurement Determine the time required to do a job compared to alternative method Determine budgeting and costing for a job. Effective production planning and maintenance procedures.   Aids in calculating exact delivery dates. Provides a basis for fair and sound incentive schemes .

16. Incentive System Is a system that provides additional pay or bonus (in addition to wages) for qualitative and quantitative performance which exceeds standard or normal levels. The main purpose of a good wage-incentive plan is to motivate workers to produce more by allowing them to earn more.

17. Advantages Building good relations between employers and employee Increasing productivity Boosting employee morale, motivation and regularity Controlling costs for production Improving quality of life Allocating resources optimally and Bringing about flexibility in changing business conditions.

18. Balance or Debt Method This method is a combination of time and piece wage systems. The worker is guaranteed a time rate with an alternative piece rate.

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