Basic Principles of Labor Remuneration

Basic Principles of Labor Remuneration

Basic Principles of Labor Remuneration

Remuneration has been defined as the reward for labor and services rendered. All business organizations should have a proper method of remuneration for their employees. The remuneration for labor is wages. The workers put effort & get wages in exchange for that. The management’s aim should be to achieve high productivity. So, it has to devise a method or remuneration in such a way that it promotes goodwill and satisfaction among the laborers and at the same time, increasing the efficiency, economy, and productivity of firms too. A good incentive scheme should fulfill the following requirements:

(a) Easy to understand: The scheme should be understood by the workers easily. They themselves should calculate their earnings.

(b) Motivation: The scheme should be so devised that it can motivate their workers to raise production.

(c) Savings in production cost: The plan should result in savings in the cost of production.

(d) Less supervision: It should be made in such a way that it can result in minimum supervision.

(e) Reward for good production: The scheme should discourage spoilage and defective work and reward good production.

(f) Comply with statutory guidelines: It should guarantee the minimum days’ wages as per the Minimum Wages Act.

(g) Time lag: The time lag between the effort and the reward should be kept a minimum.

(h) Inexpensive: The scheme should be administered with minimum expense.

(i) Labor turnover: The scheme should be so attractive that workers remain in the organization for a longer period.

(j) Equal opportunity: All workers should be provided with equal opportunity to earn more. There should be no room for any vested interest.

(k) Uniformity: The scheme should be devised in such ‘a way that there should be uniformity of reward for the same amount of effort.

(l) Complementary to other control systems: The plan should facilitate the other control systems such as budgetary control and standard cost systems.

(m) Continuity and permanency: This should be based on a permanent basis and continued for a long period.

(n) Flexibility: It should be so flexible that it can accommodate any changes in the figure.

(o) Coverage: Indirect workers also should be covered under this scheme.