SUMMER INTERNSHIP PROGRAM

REPORT ON
WAGES AND SALARIES ADMINISTARTION
PROGRAM AT MURALI FORTUNE PARK

BY: RIDDHI JAIN

170541245
BBA 2ND YEAR
SUBMITTED TO:
Dr.

A report submitted in partial fulfilment of the

requirements of
The BBA-MBA Program (Class of 2019)
KLU Business School
OBJECTIVES:
 To study the fluctuations in wage and salary policies of HOTEL MURALI
FORTUNE PARK management and employee satisfaction.
 To compare the wage and salary administration practices between workers and
officials.
 To know the strategies adopted in the wage and salary administration practices of the
hotel during the challenging situation faced by it and to come out if such situations.
 To know the level satisfaction of the employees regarding the wage & salary
administration in the hotel.
 To get insights into organizations, its longevity, its profitability and its relations
effecting the profitability.
 Learn To make healthy relations in world of business.
 To learn how does an organizations ensure survival in its tough times.
 To understand how an organization does adapts to the dynamic changes that occur in
the business environment.

TARGETS DURING SIP:

TARGETS
1. To know about the company structure and its functioning.
2. To have a knowledge about the parent company and its functionality.
3. To achieve the objectives of the SIP.
4. To study various departments in the organization.
5. To prepare a SWOT analysis regarding the company.
6. To do the assigned work within the time frame.
7. To learn about the salaries and wages administration in the company.
8. To understand the process and ways adapted by the company for distribution of
salaries and wages.
9. To gather information from the employees regarding the working environment in the
company with the help of a questionnaire.
STRATEGIES
Each employees’ performance levels were taken into consideration before paying
their salary/wage
A portion of salary was deducted based on the leaves taken in that particular month.
After deducting the benefits provided to them, their salaries were paid.
Bonus or appraisals were given to those employees who achieved more than their
given targets.
The management uses some method in order to payment of salaries.

Wage and Salary Administration

Wage and salary Administration is essential application of a systematic approach to

the problem of ensuring that employees are paid in a logical, fair and equitable manner. The
payment of wages and salary is an inbuilt system with human force for their activity
performed. To what extent the payment of wages & salary is reasonable and adequate in
consonance to the nature of the work performed.

The payment of wages and salary is an inbuilt system with human force for their
activity performed. The supply of labor is more than the demand and with the result there is
exploitation of cheap labor policy. Later the advent of trade unionism helped to improve the
working conditions of labor. Until Second World War, event the government adopted a
“LAISSEZ- FAIRE” policy in this regard. It was as late as in 1947, which the industrial
unrest becomes so uncontrollable that a tripartite conference was convened of

(1) Central and state govt.

(2) Employers

(3) Employees which resulted in Industrial trade resolution.

Why is Wage and Salary Administration important?

The words wage and salary are sometimes considered synonymous strictly speaking however

they have slightly different meaning. Wage refers to at an hourly rate of pay and is the pay

basis used most frequently for production and maintenance employees. Salary refers to a

weekly, monthly, or yearly rate of pay.

Wage and Salary Administration is important for the following reasons:

 Attract and Retain the Employees: If an organization possesses good wage and salary

structure, it will attract and retain suitable, qualified, and experienced personnel.

 Builds High Morale: The wage rates established for various categories of jobs should

be internally consistent; it will motivate the employees of the organization. It will

build the high morale of employees and act as an incentive to greater employee

productivity and efficiency.

 Satisfied Employees: A good wage and salary structure will keep the employees

satisfied. There will be lesser labor turnover, industrial disputes and employee

grievances and exigencies.

 Labor Cost Equitable: A good wage and salary structure will maintain two types of

equitabilities viz., (a) labor cost equitable and, (b) equitable wage and salary structure.

Pay according to the work performed by an employee. If an employee is performing

hazardous work pay him more.

  No Favoritism/Bias: If an organization has a definite wage and salary structure,

favoritism bias can be avoided.

 Clearly drawn the line of promotion: If a company has a good wage and salary

structure, it can have a definite sequence of jobs and clearly drawn the line of

promotion.

 Image of Progressive Employer: A good and definite wage and salary structure

would enable the company to project in the public. All image of a progressive

employer.

 Harmonious Industrial Relations: A good wage and salary structure will serve as a

sound basis for collective bargaining and enable the maintenance of satisfactory

union-management and employee-management relations.

 Ensure Minimum Wages: A good wage and salary structure should also conform to

the minimum wage laws.

Why Wage and Salary Administration in Murali Fortune Park?

The main objective of wage and salary administration is to establish and maintain an
equitable wage and salary system. This is so because only a properly developed
compensation system enables an employer to attract, obtain, retain and motivate people of
required calibre and qualification in his/her organization. They are outlined and discussed
subsequently:
Accordingly, the objectives of system are to:

1. Enable an organization (Murali Fortune) to have the quantity and quality of staff it

requires.

2. Retain the employees in the organization.

3. Motivate employees for good performance for further improvement in performance.

4. Maintain equity and fairness in compensation for similar jobs.

5. Make the system cost-effective.

From individual employee’s point of view, the compensation system should have the

following objectives:

1. Ensures a fair compensation.

2. Provides compensation according to employee’s worth.

3. Avoids the chances of favouritism from creeping in when wage rates are assigned.

4. Enhances employee morale and motivation.

Pay structure in India = Basic pay + Dearness allowance + HRA + Overtime pay

The employee benefit package normally contains apart from basic pay, a dearness allowance,
overtime payment, annual bonus, incentive systems, and a host of fringe benefits.

Basic Pay

The concept of basic Pay is contained in the report of the Fair Wages Committee. According
to this Committee, the floor of the basic pay is the “minimum wage” which provides “not
merely for the bare sustenance of life but for the preservation of the efficiency of the workers
by providing some measure of education, medical requirements and amenities.” The basic
Pay has been the most stable and fixed as compared to dearness allowance and annual bonus
which usually change with movements in the cost of living indices and the performance of
the industry.

Dearness Allowance

Dearness allowance is a cost of living adjustment allowance paid to the government

employees and pensioners. It is one of the components of salary, and is counted as a fixed
percentage of the person's basic salary. It is adjusted according to the inflationary trends to
lessen the impact of inflation on government employees.
The fixation of wage structure also includes within its compass a fixation of rates of dearness
allowance. In the context of a changing pattern of prices and consumption, real wages of
the workmen are likely to fluctuate greatly. Ultimately, it is the goods and services that a
worker buys with the help of wages that are an important consideration for him. The real
wages of the workmen thus require to be protected when there is a rise in prices and a
consequent increase in the cost of living by suitable adjustments in these wages. In foreign
countries, these adjustments in wages are effected automatically with the rise or fall in the
cost of living.

How to Calculate Dearness Allowance?

DA is calculated as a percentage of (basic pay + grade pay). After 1/1/2006 the calculation of
DA for government employees is as follows:

Dearness Allowance Percentage = {[Average of AICIP (Base year 2001 = 100) for the past
12 months – 115.76]/115.76} x 100

Formula for calculating DA for Central public-sector employees after 1/1/2007 is:

Dearness allowance Percentage = {[Average of AICIP (Base year 2001 = 100) for the past 3
months – 126.33]/126.33} x 100

AICIP stands for All India Consumer Price Index

Beginning 1st of January 1996, the dearness allowance is granted to compensate for price
increases to which the revised pay scales relate. This will be reviewed twice a year, on 1st
January and 1st July.

House Rent Allowance

House rent allowance (HRA) is paid by an employer to the employee to meet expenditure
actually incurred on payment of rent in respect of residential accommodation occupied by the
employee.

Overtime Payment

Working overtime in industry is possibly as old as the industrial revolution. The necessity of
the managements’ seeking overtime working from employees becomes inevitable mainly to
overcome inappropriate allocation of manpower and improper scheduling, absenteeism,
unforeseen situations created due to genuine difficulties like breakdown of machines. In
many companies, overtime is necessary to meet urgent delivery dates, sudden upswings in
production schedules, or to give management a degree of flexibility in matching labour
capacity to production demands. The payment of overtime allowance to the factory and
workshop employees is guaranteed by law. All employees who are deemed to be workers
under the Factories Act or under the Minimum Wages Act are entitled to it at twice the
ordinary rate of their wages for the work done in excess of 9 hours on any day or for more
than 48 hours in any week. The major benefit of overtime working to workers is that it offers
an increase in income from work.

Annual Bonus

The bonus component of the industrial compensation system, though a quite old one, had
assumed a statutory status only with the enactment of the Payment of Bonus Act, 1965. The
Act is applicable to factories and other establishments employing 20 or more employees.

Eligibility: Every employee not drawing salary/wages beyond Rs. 10,000 per month who has
worked for not less than 30 days in an accounting year, shall be eligible for bonus for
minimum of 8.33% of the salary/wages even if there is loss in the establishment whereas a
maximum of 20% of the employee’s salary/wages is payable as bonus in an accounting year.
However, in case of the employees whose salary/wages range between Rs. 3500 to Rs.
10,000 per month for the purpose of payment of bonus, their salaries/wages would be
deemed to be Rs. 3500.

Fringe Benefits

The remuneration that the employees receive for their contribution cannot be measured by
the mere estimation of wages and salaries paid to them. Certain supplementary benefits and
services known as “fringe benefits” are also available to them. The characteristics of fringe
benefits are:
 1. These benefits are distinctly additional to the regular wages paid to the workers. As
such, they are not provided as a substitute for wages or salaries of the employees.
2. These benefits are meant primarily to be of advantage to the employees.
3. The advantages accrued to the employees through the provision of fringe benefits are
as such they cannot be secured through their own individual efforts.
4. Only those benefits fall within the purview of fringe benefits which are or can be
expressed in cash terms.
5. The scope of fringe benefits is different from that of welfare services. Fringe benefits
are provided by the employers alone whereas welfare services may be provided by
other agencies as well. Benefits that have no relation to employment should not be
regarded as fringe benefits.

The Wage and Salary Determination Process:

The following figure illustrates the steps involved in wage determination process:
Usually, the steps involved in determining wage and salary rates are as follows:

(i) Job Analysis:

A job analysis describes the duties, responsibilities, working conditions and

interrelationships between the job as it is and the other jobs with which it is associated. Job
descriptions are crucial in designing pay systems, for they help to identify important job
characteristics.

They also help determine, define and weigh compensable factors (factors for which an
organization is willing to pay-skill, experience, effort and working environment). After
determining the job specifications, the actual process of grading, rating or evaluating the job
occurs.

A job is rated in order to determine its value in relation to all other jobs in the organization
which are subject to evaluation. The next step is that of providing the job with a price. This
involves converting the relative job values into specific monetary values or translating the
job classes into rate ranges.

(ii) Conduct the Salary Survey:

Compensation or salary surveys play a central role in pricing jobs. Virtually every employer,
therefore, conducts at least an informal survey.

Employers use salary surveys in three ways:

(i) Survey data are used to price bench mark jobs that anchor the employer’s pay scale and
around which the other jobs are slotted, based on their relative worth to the firm.
(ii) Some Jobs (generally 20% or more) of an employer’s position are usually priced directly
in the market place (rather than relative to the firm’s benchmark jobs), based on a formal or
informal survey of what competitive firms are paying for comparable jobs.

(iii) Surveys also collect data on benefits like insurance, sick leave and vacations to provide a
basis for decisions regarding employee benefits.

Salary surveys can be formal or informal. Informal telephone surveys are good for quickly
checking on a relatively small number of easily identified and quickly recognized jobs. Such
as when a company’s HR manager wants to confirm the salary at which to advertise a newly
open cashier’s job.

In formal surveys, most firms either use the results of packaged surveys available from the
research bodies, employers’ associations, government labor bureaus etc. or they participate in
wage surveys and receive copies of results or else they conduct their own. These surveys
may be carried out by mailed questionnaire, telephone, or personal interviews with other
managers and personnel agencies.

Wage and salary surveys provide many kinds of useful information about differences in
wage levels for particular kinds of occupations. This can have a great influence on an
organization’s compensation policy.

(iii) Group Similar Jobs into Pay Grades:

After the results of job analysis and salary surveys have been received, the committee can
turn to the task of assigning pay rates to each job, but it will usually want to first group jobs
into pay grades.
A pay grade is comprised of jobs of approximately equal difficulty or importance as
determined by job evaluation. Pay grading is essential for pay purposes because instead of
having to deal with hundreds of pay rates, the committee might only have to focus on say 10
or 12.

(iv) Price Each Pay Grade:

The next step is to assign pay rates to pay grades. Assigning pay rates to each pay grade is
usually accomplished with a wage curve. The wage curve depicts graphically the pay rates
currently being paid for jobs in each pay grade, relative to the points or rankings assigned to
each job or grade by the job evaluation.

The purpose of wage curve is to show the relationship between:

(i) The value of the job as determined by one of the job evaluation methods and

(ii) The current average pay rates for the grades.

If there is reason to believe that die present pay rates are substantially out of step with the
prevailing market pay rates for those jobs, bench mark jobs within each grade are chosen and
priced via a salary survey. The new market based pay rates are then plotted on the wage
curve.

(v) Fine-Tune Pay Rates:

Fine tuning involves correcting out of line rates and developing rate ranges:

(a) Developing Rate Ranges:

Most employers do-not pay just one rate for all jobs in a particular pay grade. Instead, they
develop rate ranges for each grade so that there might be different levels and corresponding
pay rates within each pay grade. The rate range is usually built around the wage line or
curve.

One alternative is to arbitrarily decide on a maximum and minimum rate for each grade. As
an alternative, some employers allow the rate range for each grade to become wider for the
higher pay ranges reflecting the greater demands and performance variability inherent in
these more complex jobs.

There are several benefits of using rate ranges for each pay grade. Firstly, the employer can
take a more flexible stance with respect to the labour market. It becomes easier to attract
experienced, higher paid employees into a pay grade where the starting salary for the lowest
step may be too low to attract such experienced personnel.

Secondly, Rate ranges can also allow the employer to provide for performance differences
among employees within the same grade or between those with different seniority.

(b) Correcting out of Line Rates:

The average current pay for a job may be too high or too low, relative to other jobs in the
firm. If a rate falls well below the line, a pay rise for that job may be required. If the rate falls
well above the wage line, pay cuts or a pay freeze may be required.

Underpaid employees should have their wages raised to the minimum of the rate range for
their pay grade, assuming the organization wants to retain those employees and has the funds
to do so. This can be done immediately or in one or two steps.

There are several ways to cope with the over paid employees:
(i) To freeze the rate paid to employees in this grade unless general salary increases bring the
other jobs into line with it.
(ii) To transfer or promote some or all of the employees involved to jobs for which they can
legitimately be paid their current pay rates.

(iii) To freeze the rate for some time, during which time the overpaid employees should be
transferred or promoted. If it cannot be done, then the rate at which these employees are paid
is cut to the maximum in the pay range for their pay grade.

(vi) Wage Administration Rules:

The development of rules of wage administration has to be done in the next step.

It is considered advisable in the interest of die concern and the employees that the
information about average salaries and ranges in the salaries of group should be made known
to the employees concerned; for secrecy in this matter may create dissatisfaction and it may
also vitiate the potential motivating effects of disclosure. Finally, the employee is appraised
and the wage is fixed for the grade he is found fit.

WAGE INCENTIVES:

Wage incentives are extra financial motivates. They are designed to stimulate
human effort by rewarding the persons, over and above the time rate remuneration for
improvements in the present or targeted results.

TYPES OF INCENTIVES PLANS:

 HALSAY SYSTEMS:
Under this system a standard time is fixed for the completion of job if the
worker completes the job in less than the standard time the time actually spent on the job he
is paid at hourly rate plus a bonus for the time saved.
  ROWAN SYSTEM:
Under this system, a standard time is allowed for job and a bonus is paid for
time saved. The bonus is percentage of the workers part at a hourly basis. The percentage
being equal to the proportion the proportion the time saved bears to standards is attained.

 TAYOR DIFFERENTIAL PIECE RATE SYSTEM:

This has a piece rate for output below standard and a piece rate per open above
standard with a bonus of 50% of the hourly rate of wages when standard is attained.

 MERRICK DIFFERENTIAL PIECE RATE SYSTEM:

Straight piece rates are fixed up to 83% of standard o/p at which a bonus of 10%
on reaching standard o/p, beyond standard o/p high piece rates.

 GRANT TASK SYSTEM:

Under this system for open below standard, the worker gets a guaranteed
minimum hourly rated, on reaching standards o/p, he gets 20% bonus, for
outputs exceeding the standards high piece rates are paid.

ACHIEVEMENTS

 Complete understanding about the company and its functionality.

 Prepared a questionnaire based on the employees review.
 Had a tour of various departments of the hotel.
 Interacted with some employees and managers regarding our queries formed during
the SIP program.
 Held a meeting with some employees and also reviewed their previous earnings files.
 Gave suggestions and feedbacks regarding their level of performance and also to get
more incentives with the help of Company guide.
LIMITATIONS

The study made by me in Murali Fortune Park was confined to determine wage and salary
method and practices being followed:

 The lack of availability of information.

 The collected one does not give the complete information.
 As time period is 2 months, it is very difficult to get a clear picture.
 The sample size taken for the research is small due to constraints of time.
 Some of the employees had not co-operated in filling of questionnaire.

CONCLUSION
It has been a wonderful experience working with MURALI FORTUNE
PARK HOTEL as they have given me an opportunity to learn about the human resource
management sector of the company. I have been to various departments in the company and
knowing about all the operations of the organization. I have visited various managers and
employees who explained about the various things and methods of wage and salary
administration which the company uses to evaluate the salaries/wages for its employees. It is
very important to maintain good relations in the world of business to ensure survival. An
effective time management allows us to do our assignment efficiently and meet our
schedules on time which thus increases the credibility of the employees thus leading to more
incentives in their pockets. In working environment, teamwork is vital in contributing to a
strong organization. Teamwork is also essential in reaching the goals of the organization as
an entity. Thus, communicating and sharing is much needed in the working environment
among the employees as well as between the various levels of the company. This is because
working together as a team is easier in reaching our targets, rather than operating
individually.