Wage payment systems
Encyclopedia
Wage Payment Systems are the different methods adopted by organization
s by which they remunerating
labour. There exist several systems of employee wage
payment and incentive
s, which can be classified under the following heads :
Organization
An organization is a social group which distributes tasks for a collective goal. The word itself is derived from the Greek word organon, itself derived from the better-known word ergon - as we know `organ` - and it means a compartment for a particular job.There are a variety of legal types of...
s by which they remunerating
Remuneration
Remuneration is the total compensation that an employee receives in exchange for the service they perform for their employer. Typically, this consists of monetary rewards, also referred to as wage or salary...
labour. There exist several systems of employee wage
Wage
A wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...
payment and incentive
Incentive
In economics and sociology, an incentive is any factor that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. It is an expectation that encourages people to behave in a certain way...
s, which can be classified under the following heads :
- Time Rate Systems
- Time Rate System: Under this system, the worker is paid by the hour, day, week, or month.
- High Wage plan: Under this plan a worker is paid a wage rate which is substantially higher than the rate prevailing in the area or in the industry. In return, he is expected to maintain a very high level of performance, both quantitative and qualitative.
- Measured day work : According to this method the hourly rate of the time worker consists of two parts viz, fixed and variable. The fixed element is based on the nature of the job i.e. the rate for this part is fixed on the basis of job requirements. The variable portion varies for each worker depending upon his merit rating and the cost-of-living indexCost-of-living indexCost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time are often operationalized in a cost of living index. Cost of living calculations are also used to compare the cost of maintaining a certain standard of living in different geographic areas...
. - Differential time rate : According to this method, different hourly rates are fixed for different levels of efficiencyEfficiencyEfficiency in general describes the extent to which time or effort is well used for the intended task or purpose. It is often used with the specific purpose of relaying the capability of a specific application of effort to produce a specific outcome effectively with a minimum amount or quantity of...
.
- Payment by Results
- Piece Work
- Straight piecework system : The wages of the worker depend upon his output and rate of each unit of output; it is in fact independent of the time taken by him.
- Differential piece work system: This system provide for higher rewards to more efficient workers. For different levels of output below and above the standard, different piece rates are applicable.
- Taylor Differential Piece Work System
- Merrick Differential Piece Rate System
- Combination of Time and Piece Work
- Gantt task and bonus system: the system consists of paying a worker on time basis if he does not attain the standard and on piece basis(high rate) if he does.
- Emerson’s efficiency system: Under this system minimum time wages are guaranteed. But beyond a certain efficiency level, bonus in addition to minimum day wages is given.
- Piece Work