Procedure of wage and salary administration: the basic steps in the process of setting wages and salaries of employees are:
Step 1: job analysis: formulation of job description and job specification - firstly the job is thoroughly analyzed and identified through time and motion and other studies in the terms of its requirements, difficulties, responsibilities etc and job descriptions are prepared to state the characteristics of the job. Job description and particularly job specifications describe the mark to be performed. Responsibility involves the skill and training required the conditions under which the work has to be performed and type of personnel required for the job, personnel qualities required.
Step 2: job evaluation: when the worth of each job has been established they are classified and then their relationships are established. Job evaluation is the operation of evaluating a particular job in the relation to the other jobs either within or without the organization. Thus, relative value or worth of all jobs is determined and job structured is prepared.
Step 3: pricing job structure: then the prices are related or determined for the each job. Pricing job structure to form wage and salary, structures involves numerous and complex considerations including compensation, legislation existing wage rates, union demands, cost of the living and labour costs. It may also be influenced by consideration related to price of products in the competitive market cost of the labour substitute profits and other factors of primary and general importance.
Step 4: method of wage payment: when the wage structure has been priced, methods of payment should be set up to pay employees. The basic system may sometimes incentive system of payment and extra payments are also associated with the basic system.
Step 5: evaluation of the wage and salary administration: the last step is to evaluate the efficiency of the wage and salary administration, principals, policies, procedures etc.