Understanding Wage Administration

A wage is a payment made by an employer to an employee for work performed. Wage payments are usually made in cash or direct deposit to a bank account. It is essential to know gross wages meaning before diving deep into wage administration.

Gross wages mean the total wages earned before any deductions. It is calculated by adding together the net sum received from all different sources of employment during the period in question.

This is money paid out to specific employees — a group of customer service reps who work in designated areas in a call center. Wages would be calculated based on how many hours they worked and paid per hour.

On the other hand, salaries are based on the amount of time worked by an employee over a specified period — usually one year, although they can be longer or shorter.

8 Key Factors Influencing Wages in HRM

In every industry, several different factors affect employee wages. One is the cost of living in their area. Another might be the type of work they do — fast-food workers are paid less than their counterparts at a law firm or doctor’s office.

Fears, Careers, Robot Peers: PyjamaHR Support Pros Talk AI

Join us for an authentic conversation with members of Help Scout’s own customer service team as they discuss the ways AI is changing their jobs, how they really feel about it, and how they’re taking charge of their own career direction.

Demand and Supply of Labor

Many factors determine the wage level in HRM. A key component of wage administration is setting and adjusting work rates based on market conditions, such as supply and demand for labor.

If there is an increased demand for labor, employers will increase their hiring of workers to meet this increased demand for work. If there is a decreased demand for labor, employers will drop their hiring of workers to meet this reduced demand for labor.

Ability to Pay

The ability to pay is one of the most important factors considered by HR managers, who use it to determine acceptable wages for particular positions in the workplace.

The ability to pay is determined by the nature of the job and beyond what the employees can do due to their level of qualification, experience, skills, and abilities. Companies can pay more or less depending on their financial standing.

Type of Employment

One of the crucial factors that influence wages is the type of job in employment. The more complex a job is, and the more knowledge required to perform it, the more valuable the employee.

One can generally expect to make more money in the higher-paying industries, like finance or media, but the same is true of lower-paying sectors like hospitality. Well-educated and qualified professionals in high-paying professions, such as accountants, lawyers, engineers, doctors, and teachers, generally enjoy higher average wages than those employed in low-paying occupations such as retail salespeople and sales clerks.

Legal Provisions

One of the essential factors impacting employees’ wages in HRM is the legal provisions that have been made to protect employees from unfair dismissal, redundancy, and other adverse employment practices. These provisions are known as ’employment contracts (or ‘termination agreements’) and govern the relationships between employers and employees.

Recommended Posts

Comparative Wage Levels

Fairness is a central issue for those who believe employers should pay competitive wages. The prevailing view seems to be that if market forces are allowed to operate, companies will pay competitive wages to employees. In some cases, this means offering better benefits than competitors or providing higher starting salaries. In other cases, companies must compete for a limited talent pool by offering employees attractive compensation packages or quality of life perks like free meals or recreational activities.

When an employee chooses a suitable occupation for themselves, they need to consider the “comp” factor — what other employers in your area offer in terms of compensation. Given their importance, it’s hardly surprising that this is one of the most critical factors contributing to wage levels in HRM.

Nature of Job

In the modern world of work, the nature of a job is changing. The most current work environments are dynamic, fast-paced, and require workers to be adaptive and skilled in several different areas.

Those with jobs that contribute to the community or bring higher economic value tend to have more money than accounting or retail sales clerks. People with longer tenure at their current job tend to earn more than those who have moved frequently.

Working Hours

Two types of time-related factors influence wages. The first one is the compensation rate per hour worked, which is dependent on the hourly pay rate. The second factor is the employee productivity-pay rate ratio, which measures the output per hour worked.

Employees who work long hours are not only paid more; they are also given better benefits and other perks.

Cost of Living

The cost of living is a crucial factor in an employee’s wages. The definition of living wage varies, but generally, it refers to the amount of money an individual needs to make to meet their basic needs.

This means that if an employee moves to an organization from another city or town, one of the first things they’ll need to consider is how much it will cost them and their family to live there.

How to Calculate Wages

The most common way to calculate an employee’s wage is by using the hourly method. Wage calculation is a bit more complicated than it may seem. If you need to calculate employee wages for an hourly employee, you first need to figure out the number of hours worked. The basic wages formula for calculating an employee’s wage is to divide their total pay by the number of hours worked.

The Difference between Wage and Salary

Both wages and salary are compensation terms, but they have significant differences. Salary is a fixed amount a company pays to its employees each month. On the other hand, wages are periodic payments made by companies to their employees for a definite period.

Wage is paid to an employee per hour in exchange for work performed, whereas salary is delivered to an employee regularly regardless of the hours worked. Salaries are usually paid every month and occasionally quarterly or annual. As it can be seen, the main difference between employee wages and salary is the frequency of payment.

Frequently Asked Questions(FAQ)

How salary and wages are administered in organizations?

Wages are payments for labor services rendered frequently, expressed in hourly rates, while a salary is equal, expressed in weekly, monthly or annual rates.

What are the different methods of wage payment?

There are two basic methods of wage payment: (1) Time Wage System and (2) Piece Wage System.

Like what you see? Share with a friend.