UNIT – I Lesson 1 HRM – AN OVERVIEW Lesson Outline Nature of ...

4.1 Introduction
Human resource activities are based on the propositions that highest goals can be achieved
only by developing and maintaining a loyal, efficient group of employees, who believe in
the company, who gain satisfaction from their work, and from whom extraordinary
achievement is an individual ambition. In order to achieve these conditions a professional
would need a strong foundation on the variables like morale, motivation, compensation
and Quality of Work Life, which are being elaborated upon in this unit. In the absence of
an amiable and cohesive human resource environment, an organization’s activities would
see a gradual decline, even if the organization is provided all resources. Organizations that
focus their energies on achieving reasonably satisfying levels of Human Resource
Development indicators tend to be more stable and healthy.
4.2 Principal compensation Issues and Management and Basic Concepts in
Compensation
The total of all rewards provided employees in return for their labor is called by the
generic term “Compensation”. Monetary compensation includes both direct and indirect
components. Direct compensation consists of the base wage and incentives. Job-based pay
and competency-based pay are two methods of determining the base wage or salary.
Indirect compensation includes benefits that are mandated by law and those that
employers provide voluntarily. Social security, unemployment compensation, and
workers’ compensation are benefits that employers provide. Allowances for house rent or
to meet escalating cost of living, Insurance and vacation pay are commonly offered
benefits and perquisites that are not required by laws. Factors like minimum wage
specified by legislation, the market rate for different qualifications, an organization’s
ability to pay and the compensatory factors other than pay that an organization could offer
to its employees are some of the determinants of compensation levels.
4.3 Wage and Salary
Wage and Salary is together known as pay. While wage specifies the worth of the job,
salary specifies the worth of the person. Salary is usually paid on a monthly basis while
wage could be paid daily, weekly or fortnightly. Wage is usually associated with manual
work and comes with provisions for overtime work, while the word salary is used to refer
the remuneration for white-collar staff, professionals and managers. Wages and salaries
have also been used interchangeably. Both wage and salary help to achieve effective
employee performance.
Wage is the part of total production that is the return to labor as earned income as
distinct from the remuneration received by capital as unearned income. Wage freeze